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Value-based Pharma Contracts in Action: 2 Real-world Examples


UPMC Health Plan has recently entered into two value-based contracts for medications related to treating diabetes and opioid addiction.

There is growing interest in new and more progressive ways for payers and pharmaceutical manufacturers to create partnership contracts that connect a manufacturer’s reimbursement to the value that their pharmaceutical products deliver, according to one expert.

“Despite this growing interest, such contracts have been hindered by several barriers, including limited collaboration and consensus between prescribers and payers, difficulty measuring value-due to fragmented and limited data sets and lack of consensus on measures” says Chronis Manolis, RPh, chief pharmacy officer, UPMC Health Plan.

Despite these barriers, UPMC Health Plan has recently entered into two value-based contracts:

  • A value-based contract with Boehringer Ingelheim effective January 1, 2019 for Jardiance (empagliflozin), an oral type 2 diabetes medicine also indicated to reduce the risk of cardiovascular death in adults with type 2 diabetes and established cardiovascular disease. In a first-of-its-kind contract, reimbursement for the medication will be linked to total costs of care for all people with diabetes treated. Previous contracts for Jardiance measured costs only in those with existing heart disease. Jardiance is a product in the Boehringer Ingelheim and Eli Lilly and Company diabetes alliance portfolio.
  • A value-based contract with Alkermes for Vivitrol (naltrexone for extended-release injectable suspension), a non-addictive, once-monthly treatment proven to reduce the risk of relapse in opioid-dependent patients when used with counseling following detoxification. The goal will be to work to improve adherence to Vivitrol, support members who are trying to avoid dependence on opioids, and remove barriers to access, with the goal of better health.

“In the case of Jardiance, previous contracts measured costs only in those with existing heart disease-this contract is unique in that it measures total cost of care,” Manolis says. “With Vivitrol, the goal of the contract is to align the incentives of the manufacturer with positive clinical outcomes among UPMC Health Plan members.”

Related: Value-Based Care Program Shows Measurable Results

The contracts change the paradigm around how drugs are paid for, according to Manolis. “Rather than the traditional approach of merely paying for the drug, we are now paying for results, which will encourage the insurer and the manufacturer to be on the same page-and that page is the health of the patient,” he says. “We are addressing the rising cost of medications and support more shared accountability and partnership with manufacturers, and greater value in pharmaceutical care.”

How it Came About

UPMC Health Plan established its new Center for Value-Based Pharmacy Initiatives (VBPI) last year to leverage a unique set of assets and resources at UPMC Insurance Services Division. The Center for Value-Based Pharmacy Initiatives, via contracts with various drug companies, aims to fundamentally change the way medications are paid for in the U.S.

Priorities for the VBPI include:

  • Dedicated study of various payment models and their simulated impact on cost, quality, and health outcomes.
  • Clinical expert development of optimal measures and appropriate outcomes for medications in specific populations.
  • Development and testing of new payment models for medications in multiple clinical domains.
  • A commitment to transparency, scientific publication, and broad dissemination of findings.
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