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Health Plans Seek Outcomes-Based Pricing, Says Avalere Study
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A report developed by Avalere Health, based on a survey that the company conducted among health plans in 2015, states that a majority of health plans want to sign outcomes-based contracts with biopharmaceutical companies, especially for oncology and hepatitis C drugs.
A report developed by Avalere Health, based on a survey that the company conducted among health plans in 2015, states that a majority of health plans want to sign outcomes-based contracts with biopharmaceutical companies, especially for oncology and hepatitis C drugs. Rheumatoid arthritis and multiple sclerosis were some other therapeutic areas for which insurance companies would like to see outcomes-based contracts.
These kind of contracts have the potential to significantly impact drug prices, especially in oncology, where indication-based pricing models are also being discussed. Under terms of outcomes-based contracting, a health plan gets an additional discount on the drug price if the medicine does not deliver the promised outcomes in patients.
Avalere conducted the survey in March 2015 among 42 health plans in the United States, which cover 161 million individuals. These included 2 integrated health systems, 10 national plans, and 20 regional/state plans. The survey found that health plans have significant interest in negotiating outcomes-based prices for specialty and a few non-specialty areas as well:
Disease
High interest
Very high interest
Hepatitis C
40%
23%
Oncology
33%
20%
Multiple sclerosis
20%
15%
Rheumatoid arthritis
28%
13%
Hemophilia
5%
7%
IBD
18%
5%
HIV
15%
5%
Growth deficiency
5%
IBD indicated irritable bowel disease.
According to Avalere, the need for real-world evidence of patient outcomes, cost and appropriate use of different treatments are leading health plans and manufacturers to look toward different agreement options to help them manage risk and improve predictability of meeting cost and quality targets. Experts at Avalere believe that these terms could prove beneficial to manufacturers, health plans, and providers. Additionally, it can promote strategic treatment plans as stakeholders will make efforts to select the right patient population who will derive the most benefit from a specific treatment.
The interest in outcomes-based contracts is “dramatically accelerating right now because the data is available, and it’s getting much easier to track drug performance,” Dan Mendelson, president at Avalere Health, told STAT News. “In fact, more plans are starting to demand it.” However, barriers remain, the leading ones being reaching an agreement on data sources and measurement of outcomes used in the analysis.
Health plans like Cigna have been moving in this direction—the company recently reached separate agreements with Amgen and Sanofi-Regeneron for each of their new anti-cholesterol agents, evolocumab and alirocumab, respectively.
“Despite the difficulties that plans and drug manufacturers may face when entering into a risk-based contracts, there are opportunities for all stakeholders involved to benefit in the end,” according to Kathy Hughes, vice president at Avalere. “Coming to agreement on all of aspects of a contract—design,management, payment, implementation, and data collection—is a difficult but necessary process that requires the full commitment of both parties.”
