The approaches reflect a growing number of initiatives meant to tie drug prices to value. Find out more.
The approaches reflect a growing number of initiatives meant to tie drug prices to value, such as an analytic tool deployed by a Memorial Sloan Kettering doctor in 2015.
Peter Bach, MD, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, released the tool called the “DrugAbacus,” which allows users to modify a number of parameters and compare a given drug’s actual price versus the calculated value-based price derived from the parameters.
Health plans are using the abacus to determine what drugs to pay for when setting up one size fits all pathways.
“There are a broad spectrum of options for implementing value-based contracting,” says Christine Cramer, spokesperson for CVS Health. “These include contracting with drug manufacturers as well as with providers in ways to ensure both cost effectiveness and improved outcomes. At CVS Health, we are in the process of exploring various options and developing new capabilities in this area.”
For example, says Cramer, CVS is currently developing value-based contracting approaches within its exclusion formularies, which align discounts to specific indications rather than at the level of broad therapeutic categories.
“For many drugs, particularly oncology agents and drugs for autoimmune diseases, one drug may have several different indications and the number of competitive drugs or the clinical utility may vary by indication,” she explains. “By negotiating formulary positions based on the specific indications we are able to create greater competition, lower costs and improve value for our clients.
“Keep in mind that overall, these types of contracts are very complex and are often influenced by government regulations and are dependent on process and infrastructure,” Cramer says.
Next: A closer look at Herceptin and value
According to DrugWonks.com, at a recent National Business Coalition on Health panel discussion, CVS vice president and head of specialty client solutions Surya Singh, MD, said: “I think we want to pay more for drugs that work better ... to push [manufacturers] to think about pricing things that have a better impact on survival at a higher price point and pricing things that don't have as much impact on survival at a lower price point.”
Singh went on to say: “Herceptin has gotten a lot of attention for being very good in breast cancer. It's very well studied and has great benefits. ...It’s also used in gastric cancer. The benefit in gastric cancer is minimal, but [the indication] is on label. Should we pay the same for the drug on a unit cost basis when it's used for something where it doesn't work as well? I don't think so.”
Robert Goldberg, PhD, vice president and cofounder, Center for Medicine in the Public Interest, said in a recent DrugWonks blog post: “Except that prior to Herceptin, people with advanced gastric cancer had no other treatment options. It was originally given to the 15% of gastric cancer patients that had ERBB2 overexpression and/or amplification. Overall survival was modest [2.7 months] but significant because of dearth of other therapies to keep people alive. Now there are large initiatives to identify subsets of gastroesophageal cancer based on patterns of immune response. That's how innovation evolves. Cutting the price of taking on the most challenging tumor types cheapens the lives of those seeking to survive.”