Outcomes-based contracting strategies seek to maximize payor value by basing the reimbursement for a drug on the actual health outcomes it delivers. Consider diabetes, which is among the top trend drivers for payors. This therapy class includes many drugs with double-digit, year-over-year price inflation. Should such high price tags be justified regardless of whether a drug actually helped, for example, lower a patient’s A1C level? If a drug does lower A1C levels, do the reductions meet a standard commensurate with the drug’s price tag?
Under outcomes-based contracting, a manufacturer might be required, for example, to represent that A1C levels will be lowered by a certain percentage in line with evidence used by U.S. Food and Drug Administration (FDA) approvals. If that result isn’t achieved, the manufacturers would be responsible for paying a larger rebate. This approach is still in its infancy and some of the challenges include determining the right outcome to measure and how to measure it. In addition, some drug classes lack a clinical marker that can be readily measured. The lag time between treatment and reliable outcomes data can also pose a potential hurdle.
Outcomes measures can vary by drug and disease state and include survival rates, side effects, quality of life and other similar measures. Adherence and the ability of patients to complete the course of therapy could also be factors in determining the drug’s value. CVS Health monitors research and available clinical trial data for a number of outcomes. Such data, and other information, can be used to determine “value.”
For instance, if a patient drops off therapy or if a physician changes the prescription indicating that the patient couldn’t tolerate the drug, a discount could be in order because the drug’s effectiveness is clearly compromised. If a patient doesn’t complete the set treatment course for a high-cost drug, like one to treat hepatitis C, the payor is not deriving the value of the drug and, therefore, could be entitled to a discount from the manufacturer.