A Majority of Payers used Outcomes-based Contracting: Survey

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Editor’s Note: As the broader healthcare environment evolves from a fee for service environment to one that’s value based, life sciences manufacturers should follow suit. While extracting rebates and pursuing “at-risk” contracts from vendors and partners is not novel for the life sciences manufacturers, far too often manufacturers end up bearing a disproportionate share of the risk and receive little in return in the form of outcomes. This is particularly true when it comes to hub services providers where manufacturers are on the hook for the significant investments required to stand up traditional human driven hub services programs that are often limited in their effectiveness. Instead, manufacturers should look for and prioritize partners that are willing to risk their financial outcomes on the things that matter to manufacturers like covered dispenses, medication adherence, and patient outcomes. Phil is the only hub provider that structures our pricing to align incentives with our manufacturer partners and is willing to go at risk for outcomes that matter to patients and life sciences brands. To learn more about how the PhilRx Patient Access Platform can transform the commercial trajectory of life sciences brands visit: https://phil.us/life-sciences.

A majority of payers are using outcomes-based contracts for drugs, according to a recent analysis from Avalere.

The researchers surveyed 46 health plans based in the U.S. and found that 58% had at least one outcomes-based contract in place in the 2022 plan year. More than a third (35%) said they had at least 10 such contracts in place, according to the report.

About 10% of those surveyed had either two to five contracts or five to 10 contracts in place, the analysts found. Fifteen percent said they don't currently have any outcomes-based contracts established but are in the process of negotiating them.

The majority of respondents told Avalere they are largely using these contracts for new drug products, but some existing products are also in the mix, which is "reflecting growing interest among stakeholders to align payment with clinical benefit, particularly for new products that have limited real-world clinical benefit."

The surveyed health plans were asked in which therapeutic areas they used these contracts in 2022, with the top choice being oncology. Seventeen percent of health plans said they had an outcomes-based contract in place for oncology.

In addition, 12% said they used outcomes-based contracts for oncology and about 11% said they did so for endocrinology drugs. Eight percent said they used these contracts for drugs treating rare and orphan diseases, which is a growing area of concern around costs for health insurers.

At the lowest end of the spectrum were pulmonology drugs and drugs for infectious diseases, with about 2% of the surveyed insurers naming these products.

Most of the payers who were using outcomes-based contracts (74%) said they prefer arrangements that use both claims-based and clinical outcomes to measure efficacy. However, more than half (53%) acknowledged that they do not view claims-based outcomes as a great measure for clinical benefit.

Finding alignment between stakeholders about the most effective and practical measures to determine value is one of the largest barriers to value based care models broadly, according to Avalere.

"Claims-based measures are typically easier to track because they leverage information that plans and [pharmacy benefit managers] are already gathering, rather than clinical outcomes that may need to be tracked specifically for an OBC," the researchers wrote. Clinical measures can be more difficult to track if they require new data infrastructure and pose an additional administrative burden on providers and other stakeholders."

This article was written by Paige Minemyer from FierceHealthcare and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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