- Email: [email protected]
Value-Based Pharmaceutical Contracts: Value for Who?
-
Contents lists available at sciencedirect.com Journal homepage: www.elsevier.com/locate/jval
VALUE HEALTH. 2019; -(-):-–-
Value-Based Pharmaceutical Contracts: Value for Who? Joseph T. Kannarkat, BSc,1,* Chester B. Good, MD, MPH,2,3 Natasha Parekh, MD, MS4 1 Department of Politics and International Studies, University of Cambridge, Cambridge, England, UK; 2UPMC Centers for Value-Based Pharmacy Initiatives and HighValue Health Care, UPMC Insurance Services Division, Pittsburgh, PA, USA; 3University of Pittsburgh Division of General Internal Medicine, Pittsburgh, PA, USA; 4The Queen’s Health Systems, Honolulu, HI, USA
A B S T R A C T Value-based pharmaceutical contracts (VBPCs) are performance-based reimbursement agreements between healthcare payors and pharmaceutical manufacturers in which the price, amount, or nature of reimbursement is tied to value-based outcomes. VBPCs are often complex, and the nature of who benefits and in what ways can be unclear. We discuss how VBPCs compare with value-based payor–provider arrangements in terms of performance-based reimbursements and alignment of incentives. In addition, we examine how VBPCs can affect costs, clinical outcomes, and access to medications. Because these contracts are unlikely to reduce costs in isolation, we recommend taking a patient-centered approach when developing VBPCs and tying VBPCs to more overarching payor drug cost reduction strategies. Keywords: pharmaceutical contracts, value-based contracts, drug pricing. VALUE HEALTH. 2019; -(-):-–-
Introduction Value-based pharmaceutical contracts (VBPCs) are performance-based reimbursement agreements between payors and pharmaceutical manufacturers in which the price, quantity, and nature of reimbursement are tied to clinical, intermediate, or economic endpoints.1,2 As value-based payment models between payors and providers become increasingly prominent, pharmaceutical manufacturers have followed suit with VBPCs to engage in performance-based payment arrangements. Often referred to as “performance-based risk-sharing arrangements” and “outcomesbased agreements” in the literature,1-4 VBPCs provide a potential solution to address escalating costs and uncertain real-world effectiveness of medications.5 Furthermore, they may improve patient access to novel healthcare technologies. Nevertheless, challenges exist to realizing these benefits. A notable critique of VBPCs is whether they truly provide value.1 Could they address the triple aim of improving outcomes, reducing costs, and improving access? Moreover, although the payor and manufacturer may be more obvious winners in VBPCs, could patients benefit as well? In this commentary, we distinguish between VBPCs and payor–provider value-based agreements; assess how VBPCs affect costs, clinical outcomes, and access to treatment; and provide suggestions for and examples of how VBPCs can be leveraged to optimize their impact on these key outcomes.
How Do VBPCs Compare With Value-Based Payor–Provider Arrangements? Traditional pharmaceutical contracts have been dominated by pay-for-volume schemes in which market share and volume of sales dictate manufacturer revenue.6 These models do not consider drug effectiveness in improving outcomes and as such are not inherently structured to benefit patients. To address this concern, VBPCs attempt to adapt a financing model currently executed by payor–provider contracts, using an outcome-based approach to reimbursement for pharmaceuticals. There are key differences between VBPCs and payor–provider contracts that may pose challenges for VBPCs in linking drug reimbursement with clinical outcome assessment of patients. First, payor–provider contracts have strong market leverage because a substantial proportion of provider reimbursement is often linked to performance. For instance, in the Medicare Access and Children's Health Insurance Program Reauthorization Act of 2015 value-based payment models, more than 50% of reimbursement is based on merit (cost, quality, and use of technology).7 Manufacturer–provider relationships in VBPCs, on the other hand, rarely have similar leverage.8 Another difference is that most VBPCs are pay-for-failure, in which reimbursement is given when drugs do not meet outcome goals, whereas payor–provider contracts are pay-for-success because providers are reimbursed
Conflict of interest: Chester B. Good and Natasha Parekh are employed by the UPMC Centers for High-Value Health Care and Value-Based Pharmacy Initiatives. * Address correspondence to: Joseph Kannarkat, BSc, 4625 Dillon Street, Maryland, MD 21224. Email: [email protected] 1098-3015/$36.00 - see front matter Copyright ª 2019, ISPOR–The Professional Society for Health Economics and Outcomes Research. Published by Elsevier Inc. https://doi.org/10.1016/j.jval.2019.10.009
2
VALUE IN HEALTH
more when outcomes are favorable.1 Some have argued for a realignment of VBPCs to reward success rather than failure, when feasible. Finally, VBPCs are often undisclosed to the public, thereby limiting shareable real-world evidence of agreements. It is thus difficult to assess their impact on quality and costs compared with payor-provider contracts, in which data are publicly disclosed by the Centers for Medicare & Medicaid Services.3
How Do VBPCs Affect Costs, Clinical Outcomes, and Access? Although there is little evidence to suggest that VBPCs directly reduce drug costs, measures can be taken to truly appreciate a positive impact on healthcare costs. In general, VBPCs primarily affect payor reimbursement structure rather than the market price for drugs.1 Specifically, when participating in a VBPC, payors often maintain volume-based rebate components (like traditional payor–manufacturer agreements) in addition to engaging in value-based rebate components. With this addition, payors may appreciate reduced drug costs in 2 situations. First, if value-based rebates represent a meaningful proportion of drug costs, they are more likely to lead to reductions in total costs. For instance, a payor might receive a 25% volume-based rebate if the volume of patients who use a respective drug exceeds a certain threshold and a 5% value-based rebate if the drug achieves specific outcomes. Because the 5% rebate is a low proportion of total rebates and drug costs, it is unclear that it will meaningfully reduce total costs. Nevertheless, if both volume- and value-based rebates are 15% each, meaningful cost reduction is more likely. Second, VBPCs are more likely to result in meaningful cost reduction if they are paired with other cost-reduction strategies such as formulary exclusivity, tiering, volume-based rebates, closed classes, and indication-based pricing. Viewed in isolation, VBPCs potentially may increase drug costs because VBPCs generally include branded drugs whose manufacturers are seeking to increase market penetration rather than lowcost alternatives. This “pharmacy silo” effect, however, isolates drug costs from overall healthcare costs and does not consider greater benefits of potentially more expensive drugs on clinically relevant outcomes. Because payors are responsible for their members’ total cost of care, they need to consider the impact of more expensive drugs on clinical outcomes. VBPCs that focus on total costs of care rather than drug costs alone can be beneficial if they focus on drugs that have the potential to substantially reduce downstream medical utilization costs. For instance, in UPMC Health Plan’s empagliflozin VBPC for patients with diabetes, empagliflozin is costlier (from a drug perspective) than some alternative diabetes medications. The value of this contract is based on the belief that empagliflozin offers superior clinical outcomes that will offset pharmaceutical cost increases.9 Thus, to be effective from both payor and patient perspectives, VBPCs should result in improved clinical outcomes, which ideally achieve similar or lower costs of care. For patients, costs could be reduced through 3 potential mechanisms. First, if contracts lead to substantial health plan savings, these savings could translate to reduced premiums for health plan enrollees. Realistically, given the low volume of patients currently affected by VBPCs, it is unlikely that these agreements will affect premiums. Nevertheless, as VBPCs gain momentum, it is possible that they will affect premiums in the future. Second, VBPCs could include patient co-pay reduction in their terms. For instance, UPMC Health Plan’s VBPC with Astra Zeneca shifts ticagrelor to a generic tier, so patients pay a generic copay for a brand name drug.10 Third, patient costs would be
- 2019
meaningfully reduced if a respective drug prevented adverse outcomes owing to reduced co-payments for tests, clinical visits, and hospitalizations. For example, some VBPCs include patient reimbursement for adverse outcomes. In an osteoporosis VBPC with a German-based payor, Novartis covered zoledronic acid costs for patients experiencing a fracture within a year of treatment.1 The manufacturer prevents patients from accruing costs resulting from lack of individual treatment benefit. How might VBPCs improve clinical outcomes beyond simply the improved effectiveness of a respective drug? VBPCs can incentivize favorable clinical outcomes through wraparound programs and better patient selection to optimize drug success. VBPCs are frequently arranged such that manufacturers provide rebates to payors for drug failures and typically have medication adherence requirements. This translates into patients receiving support and care management to optimize adherence and disease management. Payors typically support medication adherence as a “best practice” by offering care management and patient-facing wraparound programs such as engagement and educational outreach initiatives, mail delivery programs, and synchronized refills.11 With increased adherence and support, patients may have better outcomes, and payors may appreciate reduced downstream medical costs. Aetna Specialty Pharmacy, for example, assists patients in medication and therapy adherence through their payor-based care management programs. The company boasts treatment adherence rates of more than 96% for drugs that treat HIV, pulmonary arterial hypertension, and hepatitis C. As a result of increased adherence and disease support, patients may have better outcomes and payors may appreciate reduced downstream medical costs.12 For VBPCs to incentivize favorable clinical outcomes, it is important that contracts include truly meaningful clinical outcomes rather than short-term surrogate outcomes that may not translate to long-term benefits for patients. Nevertheless, because it takes time for certain drugs to demonstrate clinical benefits to patients, short-term surrogate outcomes are selected as VBPC outcomes. For instance, in 2016, Cigna entered into VBPCs with the manufacturers of 2 proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitors, evolocumab and alirocoumab. In both contracts, the manufacturers offered Cigna discounts on drug costs if patients did not appreciate low-density lipoprotein reductions observed in clinical trials.13 Critics of these contracts would argue that low-density lipoprotein reduction is a surrogate outcome for more patient-centric, clinically meaningful outcomes such as cardiovascular event reduction. In light of this argument, it is remarkable that in 2017, Harvard Pilgrim and Amgen entered into a VBPC for evolocumab that was regarded as particularly innovative in its inclusion of a value-based outcome. In the contract, Amgen would administer rebates to Harvard Pilgrim when eligible patients experienced a heart attack or stroke.14,15 Taken together, if surrogate outcomes are used in VBPCs, we believe there must be strong evidence that these outcomes truly correlate with longterm benefit for patients. Can VBPCs improve drug access? VBPCs can increase access to drugs, but only if paired with health plan strategies that improve access to drugs such as co-pay reduction and favorable formulary placement. For instance, Merck’s sitagliptin and sitagliptin/metformin VBPC with Cigna rewarded patients with lower out-ofpocket expenses if the drugs effectively controlled patients’ blood glucose levels.6 In addition, UPMC Health Plan’s ticagrelor VBPC aims to improve drug access through re-tiering to a generic tier for copay reduction.10 These examples benefit patients because they reduce cost as a barrier and may benefit manufacturers who may appreciate an increase in sales volume and market share.
--
Conclusion VBPCs may have the capacity to improve the value metric of pharmaceuticals by reducing health expenditures, incentivizing favorable clinical outcomes, and improving access to drugs. Nevertheless, challenges remain with VBPCs including limited real-world evidence on the impact of VBPCs, selection of appropriate surrogate outcomes for evaluating drug efficacy, the lack of evidence that they directly reduce drug costs, and low patient volume affected by VBPCs. Measures can be taken to overcome these challenges and realize their benefits. First and most importantly, VBPCs should focus on medications that clearly offer clinically meaningful benefits to patients. Second, VBPCs should be paired with more overarching payor drug cost reduction strategies because VBPCs are unlikely to reduce costs in isolation. In conjunction, it is imperative that manufacturers take on greater risk in VBPCs. Future work should evaluate more integrated models that use VBPCs as one of the tools to align incentives on all fronts, with a focus on whether patients benefit in tangible ways.
5.
6.
7.
8.
9.
10.
11.
Acknowledgments The authors have no other financial relationships to disclose.
REFERENCES 1.
2.
3.
4.
Carlson JJ, Sullivan SD, Garrison LP, Neumann PJ, Veenstra DL. Linking payment to health outcomes: a taxonomy and examination of performancebased reimbursement schemes between healthcare payors and manufacturers. Health Policy. 2010;96(3):179–190. Carlson J, Chen S, Garrison L. Performance-based risk-sharing arrangements: an updated international review. Pharmacoeconomics. 2017;35(10):1063– 1072. Mahendraratnam N, Sorenson C, Richardson E, et al. Value-based arrangements may be more prevalent than assumed. Am J Manag Care. 2019;25(2):70–76. Garrison L, Carlson J, Bajaj P, et al. Private sector risk-sharing agreements in the United States: trends, barriers, and prospects. Am J Manag Care. 2015;21(9):632–640.
12.
13.
14.
15.
3
Garrison L, Towse A, Briggs A, et al. Performance-based risk-sharing arrangements—good practices for design, implementation, and evaluation: report of the ISPOR Good Practices for Performance-Based Risk-Sharing Arrangements Task Force. Value Health. 2013;16(5):703–719. Keckley P. Value-based pricing for pharmaceuticals. Deloitte Center for Health Solutions. https://www2.deloitte.com/us/en/pages/consulting/ articles/value-based-pricing-for-pharmaceuticals.html. Published 2012. Accessed March 5, 2019. National Institute of Diabetes and Digestive and Kidney Diseases. Changing landscape: from fee-for-service to value-based reimbursement. https://www. niddk.nih.gov/health-information/communication-programs/ndep/healthprofessionals/practice-transformation-physicians-health-care-teams/whytransform/changing-landscape-fee-service-value-based-reimbursement. Accessed April 1, 2019. Buyse M, Carter S, Sarnataro K. Factors influencing the implementation of value-based contracting between pharmaceutical manufacturers and payers. J Clin Pathways. 2018;4(4):27–30. PR Newswire. UPMC Health Plan and Boehringer Ingelheim announce innovative, value-based agreement. https://www.prnewswire.com/news-rel eases/upmc-health-plan-and-boehringer-ingelheim-announce-innovativevalue-based-agreement-300720502.html. Published 2018. Accessed March 5, 2019. Rosenberg J. UPMC Health Plan, AstraZeneca enter into value-based agreement for heart drug. AJMC. https://www.ajmc.com/newsroom/upmchealth-plan-astrazeneca-enter-into-valuebased-agreement-for-heart-drug. Published 2019. Accessed March 5, 2019. Beaton T. Payer strategies for improving member medication adherence rates. Health Payer Intelligence. https://healthpayerintelligence.com/news/ payer-strategies-for-improving-member-medication-adherence-rates. Published 2017. Accessed June 18, 2019. Aetna. Aetna specialty pharmacy achieves 95 percent average medication adherence for 8 conditions. http://www.aetna.com/producer/aetnalink/2 009-4q/natlink_specialty_4q09.html. Accessed April 11, 2019. Eldred K. Cigna’s two new value-based contracts with pharma for PCSK9 inhibitor cholesterol drugs tie financial terms to improved customer health. https://www.cigna.com/newsroom/news-releases/2016/cignas-two-newvalue-based-contracts-with-pharma-for-pcsk9-inhibitor-cholesterol-dru gs-tie-financial-terms-to-improved-customer-health. Published 2016. Accessed October 10, 2019. Doshi J, Puckett J, Parmacek M, Rader D. Balancing affordability and access: lessons from new cholesterol-lowering drugs. Health Affairs Blog. https:// www.healthaffairs.org/do/10.1377/hblog20180604.549026/full/. Published 2018. Accessed September 29, 2019. Amgen. Amgen and Harvard Pilgrim agree to first cardiovascular outcomes based refund contract for Repatha evolocumab. https://www.amgen.com/ media/news-releases/2017/05/amgen-and-harvard-pilgrim-agree-to-firstcardiovascular-outcomesbased-refund-contract-for-repatha-evolocumab/. Published 2019. Accessed October 10, 2019.
Contents lists available at sciencedirect.com Journal homepage: www.elsevier.com/locate/jval
VALUE HEALTH. 2019; -(-):-–-
Value-Based Pharmaceutical Contracts: Value for Who? Joseph T. Kannarkat, BSc,1,* Chester B. Good, MD, MPH,2,3 Natasha Parekh, MD, MS4 1 Department of Politics and International Studies, University of Cambridge, Cambridge, England, UK; 2UPMC Centers for Value-Based Pharmacy Initiatives and HighValue Health Care, UPMC Insurance Services Division, Pittsburgh, PA, USA; 3University of Pittsburgh Division of General Internal Medicine, Pittsburgh, PA, USA; 4The Queen’s Health Systems, Honolulu, HI, USA
A B S T R A C T Value-based pharmaceutical contracts (VBPCs) are performance-based reimbursement agreements between healthcare payors and pharmaceutical manufacturers in which the price, amount, or nature of reimbursement is tied to value-based outcomes. VBPCs are often complex, and the nature of who benefits and in what ways can be unclear. We discuss how VBPCs compare with value-based payor–provider arrangements in terms of performance-based reimbursements and alignment of incentives. In addition, we examine how VBPCs can affect costs, clinical outcomes, and access to medications. Because these contracts are unlikely to reduce costs in isolation, we recommend taking a patient-centered approach when developing VBPCs and tying VBPCs to more overarching payor drug cost reduction strategies. Keywords: pharmaceutical contracts, value-based contracts, drug pricing. VALUE HEALTH. 2019; -(-):-–-
Introduction Value-based pharmaceutical contracts (VBPCs) are performance-based reimbursement agreements between payors and pharmaceutical manufacturers in which the price, quantity, and nature of reimbursement are tied to clinical, intermediate, or economic endpoints.1,2 As value-based payment models between payors and providers become increasingly prominent, pharmaceutical manufacturers have followed suit with VBPCs to engage in performance-based payment arrangements. Often referred to as “performance-based risk-sharing arrangements” and “outcomesbased agreements” in the literature,1-4 VBPCs provide a potential solution to address escalating costs and uncertain real-world effectiveness of medications.5 Furthermore, they may improve patient access to novel healthcare technologies. Nevertheless, challenges exist to realizing these benefits. A notable critique of VBPCs is whether they truly provide value.1 Could they address the triple aim of improving outcomes, reducing costs, and improving access? Moreover, although the payor and manufacturer may be more obvious winners in VBPCs, could patients benefit as well? In this commentary, we distinguish between VBPCs and payor–provider value-based agreements; assess how VBPCs affect costs, clinical outcomes, and access to treatment; and provide suggestions for and examples of how VBPCs can be leveraged to optimize their impact on these key outcomes.
How Do VBPCs Compare With Value-Based Payor–Provider Arrangements? Traditional pharmaceutical contracts have been dominated by pay-for-volume schemes in which market share and volume of sales dictate manufacturer revenue.6 These models do not consider drug effectiveness in improving outcomes and as such are not inherently structured to benefit patients. To address this concern, VBPCs attempt to adapt a financing model currently executed by payor–provider contracts, using an outcome-based approach to reimbursement for pharmaceuticals. There are key differences between VBPCs and payor–provider contracts that may pose challenges for VBPCs in linking drug reimbursement with clinical outcome assessment of patients. First, payor–provider contracts have strong market leverage because a substantial proportion of provider reimbursement is often linked to performance. For instance, in the Medicare Access and Children's Health Insurance Program Reauthorization Act of 2015 value-based payment models, more than 50% of reimbursement is based on merit (cost, quality, and use of technology).7 Manufacturer–provider relationships in VBPCs, on the other hand, rarely have similar leverage.8 Another difference is that most VBPCs are pay-for-failure, in which reimbursement is given when drugs do not meet outcome goals, whereas payor–provider contracts are pay-for-success because providers are reimbursed
Conflict of interest: Chester B. Good and Natasha Parekh are employed by the UPMC Centers for High-Value Health Care and Value-Based Pharmacy Initiatives. * Address correspondence to: Joseph Kannarkat, BSc, 4625 Dillon Street, Maryland, MD 21224. Email: [email protected] 1098-3015/$36.00 - see front matter Copyright ª 2019, ISPOR–The Professional Society for Health Economics and Outcomes Research. Published by Elsevier Inc. https://doi.org/10.1016/j.jval.2019.10.009
2
VALUE IN HEALTH
more when outcomes are favorable.1 Some have argued for a realignment of VBPCs to reward success rather than failure, when feasible. Finally, VBPCs are often undisclosed to the public, thereby limiting shareable real-world evidence of agreements. It is thus difficult to assess their impact on quality and costs compared with payor-provider contracts, in which data are publicly disclosed by the Centers for Medicare & Medicaid Services.3
How Do VBPCs Affect Costs, Clinical Outcomes, and Access? Although there is little evidence to suggest that VBPCs directly reduce drug costs, measures can be taken to truly appreciate a positive impact on healthcare costs. In general, VBPCs primarily affect payor reimbursement structure rather than the market price for drugs.1 Specifically, when participating in a VBPC, payors often maintain volume-based rebate components (like traditional payor–manufacturer agreements) in addition to engaging in value-based rebate components. With this addition, payors may appreciate reduced drug costs in 2 situations. First, if value-based rebates represent a meaningful proportion of drug costs, they are more likely to lead to reductions in total costs. For instance, a payor might receive a 25% volume-based rebate if the volume of patients who use a respective drug exceeds a certain threshold and a 5% value-based rebate if the drug achieves specific outcomes. Because the 5% rebate is a low proportion of total rebates and drug costs, it is unclear that it will meaningfully reduce total costs. Nevertheless, if both volume- and value-based rebates are 15% each, meaningful cost reduction is more likely. Second, VBPCs are more likely to result in meaningful cost reduction if they are paired with other cost-reduction strategies such as formulary exclusivity, tiering, volume-based rebates, closed classes, and indication-based pricing. Viewed in isolation, VBPCs potentially may increase drug costs because VBPCs generally include branded drugs whose manufacturers are seeking to increase market penetration rather than lowcost alternatives. This “pharmacy silo” effect, however, isolates drug costs from overall healthcare costs and does not consider greater benefits of potentially more expensive drugs on clinically relevant outcomes. Because payors are responsible for their members’ total cost of care, they need to consider the impact of more expensive drugs on clinical outcomes. VBPCs that focus on total costs of care rather than drug costs alone can be beneficial if they focus on drugs that have the potential to substantially reduce downstream medical utilization costs. For instance, in UPMC Health Plan’s empagliflozin VBPC for patients with diabetes, empagliflozin is costlier (from a drug perspective) than some alternative diabetes medications. The value of this contract is based on the belief that empagliflozin offers superior clinical outcomes that will offset pharmaceutical cost increases.9 Thus, to be effective from both payor and patient perspectives, VBPCs should result in improved clinical outcomes, which ideally achieve similar or lower costs of care. For patients, costs could be reduced through 3 potential mechanisms. First, if contracts lead to substantial health plan savings, these savings could translate to reduced premiums for health plan enrollees. Realistically, given the low volume of patients currently affected by VBPCs, it is unlikely that these agreements will affect premiums. Nevertheless, as VBPCs gain momentum, it is possible that they will affect premiums in the future. Second, VBPCs could include patient co-pay reduction in their terms. For instance, UPMC Health Plan’s VBPC with Astra Zeneca shifts ticagrelor to a generic tier, so patients pay a generic copay for a brand name drug.10 Third, patient costs would be
- 2019
meaningfully reduced if a respective drug prevented adverse outcomes owing to reduced co-payments for tests, clinical visits, and hospitalizations. For example, some VBPCs include patient reimbursement for adverse outcomes. In an osteoporosis VBPC with a German-based payor, Novartis covered zoledronic acid costs for patients experiencing a fracture within a year of treatment.1 The manufacturer prevents patients from accruing costs resulting from lack of individual treatment benefit. How might VBPCs improve clinical outcomes beyond simply the improved effectiveness of a respective drug? VBPCs can incentivize favorable clinical outcomes through wraparound programs and better patient selection to optimize drug success. VBPCs are frequently arranged such that manufacturers provide rebates to payors for drug failures and typically have medication adherence requirements. This translates into patients receiving support and care management to optimize adherence and disease management. Payors typically support medication adherence as a “best practice” by offering care management and patient-facing wraparound programs such as engagement and educational outreach initiatives, mail delivery programs, and synchronized refills.11 With increased adherence and support, patients may have better outcomes, and payors may appreciate reduced downstream medical costs. Aetna Specialty Pharmacy, for example, assists patients in medication and therapy adherence through their payor-based care management programs. The company boasts treatment adherence rates of more than 96% for drugs that treat HIV, pulmonary arterial hypertension, and hepatitis C. As a result of increased adherence and disease support, patients may have better outcomes and payors may appreciate reduced downstream medical costs.12 For VBPCs to incentivize favorable clinical outcomes, it is important that contracts include truly meaningful clinical outcomes rather than short-term surrogate outcomes that may not translate to long-term benefits for patients. Nevertheless, because it takes time for certain drugs to demonstrate clinical benefits to patients, short-term surrogate outcomes are selected as VBPC outcomes. For instance, in 2016, Cigna entered into VBPCs with the manufacturers of 2 proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitors, evolocumab and alirocoumab. In both contracts, the manufacturers offered Cigna discounts on drug costs if patients did not appreciate low-density lipoprotein reductions observed in clinical trials.13 Critics of these contracts would argue that low-density lipoprotein reduction is a surrogate outcome for more patient-centric, clinically meaningful outcomes such as cardiovascular event reduction. In light of this argument, it is remarkable that in 2017, Harvard Pilgrim and Amgen entered into a VBPC for evolocumab that was regarded as particularly innovative in its inclusion of a value-based outcome. In the contract, Amgen would administer rebates to Harvard Pilgrim when eligible patients experienced a heart attack or stroke.14,15 Taken together, if surrogate outcomes are used in VBPCs, we believe there must be strong evidence that these outcomes truly correlate with longterm benefit for patients. Can VBPCs improve drug access? VBPCs can increase access to drugs, but only if paired with health plan strategies that improve access to drugs such as co-pay reduction and favorable formulary placement. For instance, Merck’s sitagliptin and sitagliptin/metformin VBPC with Cigna rewarded patients with lower out-ofpocket expenses if the drugs effectively controlled patients’ blood glucose levels.6 In addition, UPMC Health Plan’s ticagrelor VBPC aims to improve drug access through re-tiering to a generic tier for copay reduction.10 These examples benefit patients because they reduce cost as a barrier and may benefit manufacturers who may appreciate an increase in sales volume and market share.
--
Conclusion VBPCs may have the capacity to improve the value metric of pharmaceuticals by reducing health expenditures, incentivizing favorable clinical outcomes, and improving access to drugs. Nevertheless, challenges remain with VBPCs including limited real-world evidence on the impact of VBPCs, selection of appropriate surrogate outcomes for evaluating drug efficacy, the lack of evidence that they directly reduce drug costs, and low patient volume affected by VBPCs. Measures can be taken to overcome these challenges and realize their benefits. First and most importantly, VBPCs should focus on medications that clearly offer clinically meaningful benefits to patients. Second, VBPCs should be paired with more overarching payor drug cost reduction strategies because VBPCs are unlikely to reduce costs in isolation. In conjunction, it is imperative that manufacturers take on greater risk in VBPCs. Future work should evaluate more integrated models that use VBPCs as one of the tools to align incentives on all fronts, with a focus on whether patients benefit in tangible ways.
5.
6.
7.
8.
9.
10.
11.
Acknowledgments The authors have no other financial relationships to disclose.
REFERENCES 1.
2.
3.
4.
Carlson JJ, Sullivan SD, Garrison LP, Neumann PJ, Veenstra DL. Linking payment to health outcomes: a taxonomy and examination of performancebased reimbursement schemes between healthcare payors and manufacturers. Health Policy. 2010;96(3):179–190. Carlson J, Chen S, Garrison L. Performance-based risk-sharing arrangements: an updated international review. Pharmacoeconomics. 2017;35(10):1063– 1072. Mahendraratnam N, Sorenson C, Richardson E, et al. Value-based arrangements may be more prevalent than assumed. Am J Manag Care. 2019;25(2):70–76. Garrison L, Carlson J, Bajaj P, et al. Private sector risk-sharing agreements in the United States: trends, barriers, and prospects. Am J Manag Care. 2015;21(9):632–640.
12.
13.
14.
15.
3
Garrison L, Towse A, Briggs A, et al. Performance-based risk-sharing arrangements—good practices for design, implementation, and evaluation: report of the ISPOR Good Practices for Performance-Based Risk-Sharing Arrangements Task Force. Value Health. 2013;16(5):703–719. Keckley P. Value-based pricing for pharmaceuticals. Deloitte Center for Health Solutions. https://www2.deloitte.com/us/en/pages/consulting/ articles/value-based-pricing-for-pharmaceuticals.html. Published 2012. Accessed March 5, 2019. National Institute of Diabetes and Digestive and Kidney Diseases. Changing landscape: from fee-for-service to value-based reimbursement. https://www. niddk.nih.gov/health-information/communication-programs/ndep/healthprofessionals/practice-transformation-physicians-health-care-teams/whytransform/changing-landscape-fee-service-value-based-reimbursement. Accessed April 1, 2019. Buyse M, Carter S, Sarnataro K. Factors influencing the implementation of value-based contracting between pharmaceutical manufacturers and payers. J Clin Pathways. 2018;4(4):27–30. PR Newswire. UPMC Health Plan and Boehringer Ingelheim announce innovative, value-based agreement. https://www.prnewswire.com/news-rel eases/upmc-health-plan-and-boehringer-ingelheim-announce-innovativevalue-based-agreement-300720502.html. Published 2018. Accessed March 5, 2019. Rosenberg J. UPMC Health Plan, AstraZeneca enter into value-based agreement for heart drug. AJMC. https://www.ajmc.com/newsroom/upmchealth-plan-astrazeneca-enter-into-valuebased-agreement-for-heart-drug. Published 2019. Accessed March 5, 2019. Beaton T. Payer strategies for improving member medication adherence rates. Health Payer Intelligence. https://healthpayerintelligence.com/news/ payer-strategies-for-improving-member-medication-adherence-rates. Published 2017. Accessed June 18, 2019. Aetna. Aetna specialty pharmacy achieves 95 percent average medication adherence for 8 conditions. http://www.aetna.com/producer/aetnalink/2 009-4q/natlink_specialty_4q09.html. Accessed April 11, 2019. Eldred K. Cigna’s two new value-based contracts with pharma for PCSK9 inhibitor cholesterol drugs tie financial terms to improved customer health. https://www.cigna.com/newsroom/news-releases/2016/cignas-two-newvalue-based-contracts-with-pharma-for-pcsk9-inhibitor-cholesterol-dru gs-tie-financial-terms-to-improved-customer-health. Published 2016. Accessed October 10, 2019. Doshi J, Puckett J, Parmacek M, Rader D. Balancing affordability and access: lessons from new cholesterol-lowering drugs. Health Affairs Blog. https:// www.healthaffairs.org/do/10.1377/hblog20180604.549026/full/. Published 2018. Accessed September 29, 2019. Amgen. Amgen and Harvard Pilgrim agree to first cardiovascular outcomes based refund contract for Repatha evolocumab. https://www.amgen.com/ media/news-releases/2017/05/amgen-and-harvard-pilgrim-agree-to-firstcardiovascular-outcomesbased-refund-contract-for-repatha-evolocumab/. Published 2019. Accessed October 10, 2019.