Four critical components for successful, value-based pharma contracts


Despite their proliferation, at-risk pharma contracts are still little more than value-based window dressing. Here are four critical components of contracts that can actually move the value meter in the right direction.

Value-based contracts between pharmaceutical manufacturers and payers look like they are here to stay. And they are growing in number. The Wall Street Journalreported last month that payers and PBMs have reached at least a dozen “value-based” or “at-risk” deals with manufacturers since 2014. These contracts bring higher payment rates for improving patient outcomes, supplanting traditional contracts in which payment brings rebates based on volume and the right place on the formulary.

Christopher Bradbury, senior vice president, integrated clinical and specialty drug solutions for Cigna Pharmacy Management has said, “When pharmaceutical companies stand behind the performance of their drugs through these kinds of contracts, we can deliver the most value to Cigna’s customers and clients for the money they are spending.”

Theoretically, value-based or “at-risk” agreements are a positive development. However, because these contracts are still based on rudimentary volumetric math, they are little more than value-based window dressing. As the only drug on formulary within these agreements, manufacturers are still banking on a simple volumetric percentage of efficacy to meet payment and profit goals. Real improvements in outcomes and value-based contracts require more lifestyle factor measurement and corresponding agreement on their evaluation.

There are some outcomes that are easy to measure: Hospital readmissions, HCV cure rates and diabetes A1c counts, for example. What’s not easy, and what is desperately needed for value-based contracts to demonstrate higher potential, are outcomes that are lifestyle dependent and involve some sort of care team.

“Insurers and manufacturers say the complexity of tracking a patient’s health-which falls on the insurer-can be a barrier, and most supply contracts still tie payments to volume of prescriptions,” according to the WSJ article. Moreover, “Alan Lotvin, executive vice president for specialty pharmacy at CVS, said the setups can be difficult to execute because many achievements-such as a reduction in heart attacks and deaths for cholesterol drugs-can take years to become clear, and patients may be impossible to track over time as they change insurers and jobs.”

Related: Opinion: Top 4 lessons learned at Asembia 2016

Next: Critical components



At Asembia 2016 last month, Patrick Dunham, CEO of Curant Health, discussed with our colleagues Javier Menendez, vice president of pharmacy operations for Virginia Premier Health Plan and Joff Masukawa with Diligentia, successful outcomes-based contracts have four critical components:

1. Inclusion of all stakeholders. At minimum “all stakeholders” includes patients and caregivers, clinicians, payers, manufacturers and specialty pharmacists. As it is today, each stakeholder faces a critical gap in ability to successfully deliver true value. For example, payers lack meaningful relationships with patients and are therefore unable to directly impact patient behavior.  On the other hand, manufacturers are not well positioned, and many times restricted from, coordinating care with patients and providers. Failure to address these gaps in care in a comprehensive manner contributes to the structural foundation of contracts that are unsuccessful in delivering measurable patient outcomes.

2. Agreed-upon outcomes metrics. The CMS Core Quality Measures are a step in the right direction insofar as the guiding principles require that the measures are meaningful to patients, consumers and physicians while reducing variability in measure selection, collection burden and cost. The ownership and arbitration of the data and analysis of value-based contract metrics is up for debate. Our position is the specialty pharmacy is best suited for that role given its interaction with multiple payers and pharmacologic expertise that helps reduce abandonment and improves adherence.

3. The right tech tools. The top needs are more advanced patient-facing HIT, patient in-home monitoring, better data analytics and meaningful improvement in communication between EHRs to fill the gaps created as patients migrate between insurers and jobs.

 Related: Top tech needs for value-minded executives

4. Leveraging the strongest links in the care coordination team. Clinical pharmacists and dedicated patient care coordinators (especially regarding barriers to access and adherence), the associated patient data collected that is not generated anywhere else and provision of effective methods for overcoming those barriers are effective tools in improving and measuring patient outcomes.

Until at-risk pharma contracts incorporate the four critical components described above, they will fall short of their potential and remain little more than value-based window dressing.



Marc O’Connor is chief operating office for Curant HealthCurant Health treats patients nationwide through its medication management protocols.

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