Experts Discuss Regulatory, Cultural Roadblocks to Progress With Value-Based Agreements

“Congress continues to ask us the same questions [about cost of healthcare] and we continue looking for different answers. Value-based agreements are the current innovative solution” to improving quality and reducing healthcare cost, said Jeff Mortier, partner at Farragut Partners. Mortier was speaking on the second day of the Community Oncology Alliance (COA) Payer Exchange Summit, held October 29-30, 2018, in Tyson’s Corner, Virginia.

Historically, HHS linked 80% of Medicare payments to value. A trigger for the current movement could have been the revelation that in 2012, US expenditures for poor care coordination and administrative burdens and fraud crossed $1 trillion, Mortier explained. “Adequate treatment and adherence in chronic conditions can save $213 billion,” he explained.

But there are barriers to operationalizing value-based agreements (VBAs), said Mortier, which echoed the thoughts of Bo Gamble, director of strategic practice initiatives, COA, who had highlighted regulatory and cultural challenges as a hurdle to VBAs during a session on the first day of the meeting.

Operational challenges, which include antikickback laws, drug pricing proposals, administrative burdens, and government pricing “all add layers of complexity to existing structural impediments,” Mortier explained.

He listed a few structural impediments to VBAs, including rebates for commercial payers, which adds downward pressure and reduces provider reimbursement; best price policy, which includes negotiations for a single lowest price; and increased 340 B liability for manufacturers.

Mortier explained that HHS’ focus on lowering list prices and introducing competition within Medicare Part B space via step therapy are some of the operational challenges that manufacturers face. He highlighted the contradiction between the government wanting to lower drug list prices and introducing value-based contracts—UnitedHealthcare’s pilot study that was launched in 2010 reported substantial savings (34%) in cancer costs over the 3-year period of the program, “but the drug cost went up 179%,” said Mortier. “So, we are a little bit at odds with this administration that wants to adopt value-based models, but they also want to lower the list price [of drugs].”

There is a need, he said, to fill Congress’ knowledge gap in the space.

“Additionally, data and reporting challenges continue to mar provider practices that don’t necessarily have the time to dedicate a team for doing this,” Mortier said. “Interoperability and meaningful use—or meaningless use as some like to call it—continue to burden practice economics as they try to engage in VBAs.”

Mortier underscored the changing cancer landscape, which has moved from being 88% in the community to 50% in the community, which he believes has caught the attention of Congress. “When you are on a safety raft, you don’t really focus on VBAs,” he said.

Big pharma’s input on VBAs

Following this policy update by Mortier was a surprise panel that COA managed to convene: an all-pharma panel, to discuss the progress and challenges with VBAs from the drug manufacturer’s outlook. Gamble told the audience that the panel was the product of a series of meetings that COA held with multiple manufacturers as part of the organization’s focus on value-based oncology care.

Participants included Erin Darling, executive director, Merck; Prasun Subedi, MD, senior director, Patient and Health Impact, Center for Health Systems Innovation Leadership, Pfizer; Tamar Thompson, MHS, Government Affairs, Alliance Development, and Policy, Bristol-Myer Squibb; and Eric Turowski, director, Oncology Payer Marketing, Pricing, and Market Access, Eli Lilly and Company.

When asked to describe their major learnings from the VBA meetings, Turowski said that VBAs are a major priority for Eli Lilly and he realized at the meetings that it’s the same for other drug manufacturers. “The meetings helped us understanding where there are alignments between us, COA [providers], payers, and employers as well.”

Thompson agreed, adding that the meetings drew attention to patient-centricity and quality measures in a meaningful way.

While such arrangements, historically, have been between manufacturers and payers, “it was interesting to learn that providers want to be a significant part of this conversation,” said Darling.

Subedi added that as VBAs stand today, stakeholders want to answer specific questions about the value of a particular treatment. He believes that access to patients and the opportunity to create data is vital to the process. According to Subedi, the best VBAs are the ones that clearly articulate the relation between the product and its value. “Simplicity is key,” he said.

One learning for Turowski was that providers have interest in getting down to the individual patient-level performance, not just the aggregate comparisons that VBAs today are built to measure.

While data is vital to this conversation, Subedi said that providers don’t need to have all the answers when they come to the table; rather, they should be patient and gain an understanding of the process, which may not be very fast paced.

Obstacles to the process

Darling pointed out that current guardrails, such as the federal antikickback statutes that were instituted a long time ago, are a major roadblock to innovation in the value-based care process because of associated legal and business risks. “It prevents us from providing value to our stakeholders: patients, providers, and payers,” she said. “We need safe harbors in the space to help us pull through collaborations that will be good for patients, but we cannot [do so] within the current frameworks of the law.”

Thompson pointed to waivers that were introduced for payers and providers to allow accountable care organization (ACO) collaborations and also for launching the Oncology Care Model (OCM). She pointed out the importance for manufacturers to understand the government’s position on what they can or cannot do, similar to changes that facilitated collaborations in the ACO and OCM environment.

“Once we have support on that front, there will be a baseline of comfort to start bigger arrangements,” Thompson said.

While manufacturers have figured out ways to work on agreements within the existing guidance, “these are very simple agreements and so we cannot innovate,” Darling told the audience. She urged the providers and payers in the room for assistance to develop a more meaningful process.

Additionally, cultural barriers include the fact that the manufacturer-physician relation has always existed within the sales or marketing environment, Thompson said. So, infusing policy conversations into the space would require a big cultural shift.

The panelists agreed that we have traveled only a small section of this path and a lot lies ahead, primarily because of the lack of support from infrastructure, technology, and regulatory rules. Darling believes that we require shifts along those dimensions and that with growing capabilities, we will move quicker.

But the patient needs to be the central component of the design of these agreements. Subedi urged providers to step up and represent their patients’ perspectives when participating in these conversations.

“We have different views of value, but we need to find the center of the Venn diagram, because that’s where the patient sits,” Darling said.