Most U.S. payers are eyeing outcomes-based drug pricing: Report

Print 21 June 2016
Tracy Staton / Fierce Biotech

Pharma may have pulled off only a few outcomes-based pricing deals with payers, but companies are likely to add more to that list soon--many more, if payers have their way.

A majority of health plans want to ink outcomes-based contracts with biopharma drugmakers, particularly in the hepatitis C and oncology arena, according to a new report from Avalere.

Other therapeutic areas are also up for grabs, though, with multiple sclerosis and rheumatoid arthritis among the areas payers would most like to target. Even drugs for widespread chronic conditions--such as cardiovascular meds--are also on payers’ radar.

“The growth of outcomes-based contracts between plans and manufacturers is a clear response to the health system’s call for cost-containment without restricting patients’ access to new, breakthrough therapies,” Dan Mendelson, president at Avalere, said in a company statement about the report.

Earlier this year, Novartis broke new ground with a couple of outcomes-based contracts on its heart failure drug Entresto. Under the deals with Cigna and Aetna, rebates rise if the drug performs as promised by keeping patients out of the hospital; they fall if the results don’t meet expectations.

Soon after, Cigna struck a similar deal with Amgen on its PCSK9 drug Repatha, and Sanofi and Regeneron on their rival med Praluent. Discounts depend on LDL reductions; if the meds deliver cuts in bad cholesterol as well as they did in clinical trials, a pre-negotiated discount applies. If the drugs don't hit those goals, the discounts increase.

These are the highest-profile agreements, but the idea is taking hold behind the scenes as well. According to a recent specialty reimbursement report from EMD Serono, about 14% of U.S. payers have at least one pay-for-performance pricing arrangement, up from 10% in 2014. Another 30% of plans say they’ll have an outcomes-based deal in place within 12 months. 

One major player could join the fray: The Centers for Medicare and Medicaid Services. In a recent--and very controversial--proposal to overhaul reimbursements for Part B meds, the agency mentioned pay-for-performance reimbursements as a method it would like to try.

In fact, CMS says it looked to private payers for "value-based purchasing tools," and wants to use strategies similar to those used by commercial health plans, pharmacy benefits managers, hospitals and other benefits managers.

There are significant challenges to implementing such deals, however, because of the fragmented U.S. healthcare system and plethora of electronic health record systems. And then there are confounding factors, too. Patients’ lifestyles and their adherence to drug regimens--or lack thereof, that is--can interfere with the effectiveness of their therapy.

As Novartis CEO Joe Jimenez--a big proponent of the outcomes-based idea--has said, data collection is going to have to improve to make these deals more viable, but that work would be worth it in the end. ”The basic infrastructure of electronic medical records, let's call it 'real-world data', is going to have to increase so that we can easily track and monitor outcomes," Jimenez said last year. "If you move to that kind of pricing system over a period of years, you will be able to take out a lot of waste.”

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