Value-Based Specialty Pharma Contracts (VBCs): The Time is Now - CrossBridge
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Value-Based Specialty Pharma Contracts (VBCs): The Time is Now

Value-Based Specialty Pharma Contracts (VBCs): The Time is Now

Interest in value-based contracts (VBCs) with pharmaceutical manufacturers by healthcare payer/payvider/employer plans is increasing. Focus on ever-higher drug costs is driving interest in value-based payment models. Of particular concern are the growing number of high-priced specialty medicines on the market and in the pipeline for oncology, autoimmune (inflammatory) and rare diseases. As new drugs launch, payers are increasingly looking to value-based pharma contracts as gateways to market access. However, these risk-sharing alternative payment models are only feasible with the help of expert, objective third parties. Both payers and pharma need integrated data and advanced analytics to support business case analysis, contract negotiations, choice and evaluation of clinical outcome measures. Most importantly, they need long-term monitoring of patient behavior and response to treatments to make such outcomes-based clinical VBCs work to reduce cost and improve patient outcomes.

What drives interest in VBCs?

A September 2021 survey by Avalere shows 56% of 51 payers surveyed have executed outcomes-based contracts (OBCs).[1] Further, an overwhelming majority of payers see increases ahead. What’s behind this interest?

Increasing cost burden of specialty drugs

Growth in number, indications and price of specialty medications (e.g., biologics,  bDMARDs) is the biggest plan cost driver today [2]. In particular, the cost of meds in rare and chronic diseases [3] oncology and inflammatory disorders [4] is at an all-time high. Furthermore, the increasing prevalence [5] of these conditions and the number of specialty drugs reaching the market [6] to treat them will drive future costs even higher.

Need for new cost-control approaches

Payers and pharmacy benefit managers (PBMs) have relied on price control and utilization management (UM) means like rebate contracting for formulary positioning, prior authorizations and step therapy. These blunt tactics have been opposed for years by providers and patients as interfering with care. While they remain major tactics for UM, newer, more precise approaches, like evidence-based pathways, are gaining traction.[7]

Evolving regulatory environment

Beyond the headlines, the September US HHS report highlights value-based pharma contracts as key tactics for drug cost control. Further, CMS is likely to modify the best-price rule in 2022, removing a key barrier. Other headwinds, like anti-kickback rules, may also shift to encourage instead of discourage value-based arrangements.[8]

Technology advances in data and analytics

Without integrated data and advanced analytics, creating and monitoring VBCs is impossible. Fortunately, access to multiple large datasets (claims, population, clinical) has increased.  Importantly, advanced data analysis capabilities are now widespread. These include population & predictive as well as clinical care planning and performance analytics. Expert third-party vendors offer objective tracking and reporting of total cost of care data combined with clinical outcomes, which for many therapy areas (especially chronic autoimmune), is critical to truly measure value.[9]

All stakeholders more willing to participate

As payers continue to seek value, collaboration with the other stakeholders is essential to making VBCs work. Gaining alignment on shared goals beyond lowering cost must include improved patient experience/outcomes and provider satisfaction.

  • Pharma increasingly sees using value-based contracting arrangements as a competitive lever that can both differentiate in crowded markets and facilitate market access in rare and niche areas where therapies are very expensive and patient populations smaller. [11].  In addition to potentially differentiated market access, other benefits life science companies are seeing in these arrangements include, access to additional clinical data, more timely administrative data, better understanding of the patient experience/journey through PRO reporting, and even improved reputation among the general public and regulators.
  • Physicians, both PCPs and specialists, are concerned with shrinking rates in a fee-for-service model and want a seat at the table to help drive value. Well-designed value agreements include physicians and align financial incentives to provide upside or shared-savings when value is demonstrated.
  • Patients, of course, want access to the most effective therapies at the lowest possible cost. There is a large amount of evidence showing that cost is a major factor in adherence. [12, 13]  Value-based arrangements are not only a lever in managing costs, they have demonstrated an ability to improve the patient experience through their additional focus on patient outcomes, including systematic collection of PROs [1].

 

Why have there been so few VBCs to-date?

Despite the many advantages of bringing more value and outcomes-based elements into drug and diagnostic reimbursement models, there have been relatively few VBCs signed across the industry [15].  In a paradigm where formulary tier positioning, volume and rebate levers are well understood, value-based contracting isn’t just less familiar, it requires a whole new approach to contracting that has historically introduced complexity and external barriers that have been difficult to overcome at scale. As summarized below, advances across the industry are dissolving most of these impediments, making VBCs much easier to effectively execute.

Most Frequently Cited Barriers to Enacting Value-Based Contracts

Structure of pharma value-based contracts

There are two general categories of pharma VBCs:

Financial VBCs include cost caps, indication-specific pricing, volume (rebates or discounts) and subscription models. Shared savings contracts delay payments to pharma with upside for medical savings. Using administrative data and financial analytics, such VBCs are relatively easy to design and implement. However, they are less effective truly linking risk to performance in that neither patient outcomes nor provider efficiency are incorporated.

Clinically-based VBCs (sometimes called outcomes-based contracts – OBCs) are better suited for high-cost specialty drugs where linking patient outcomes to reimbursement is critical. Life science companies benefit through market access and patient data for R&D, trial design & marketing. However, clinical VBCs are more difficult to design and implement because clinical data is much more complex.

Types of clinical VBCs:

  • Conditional treatment continuation: Coverage conditioned on meeting short-term treatment goals.
  • Regimen-based: Penalties for adding breakthrough meds.
  • Total cost of care: Intended to optimize trade-offs between medical and pharmacy costs.
  • Outcomes-based: Payments tied to defined clinical outcomes within a defined timeframe.

Defining clinical outcomes in chronic disease patients often calls for evidence-based care pathways and long-term monitoring, both tough for many practices. Complex digital support is needed for negotiation, goal-setting, measurements, monitoring, verification, evaluation, and feedback. Patient cohort analyses, pathways and expected range of outcomes are critical inputs to agree pricing targets and value-related adjustments.

What to look for in a VBC partner

Seek experts with technical platforms that support collecting, transforming and analyzing the data streams needed to choose and track outcomes.

  1. Clinical & financial analytics are a must to support both negotiation and implementation of these and other value-based contracts.
  2. VBCs need both clinical and administrative data, as measuring disease activity/progression is the critical value lever, especially for complex chronic conditions.
  3. In order to action a value-based contract at the point of care, care teams need the right information at the right time in their workflows to make the right decisions to get the best outcomes and value.
  4. The best solutions must be integrated with leading EMRs to identify target members and engage specialist care teams to improve productivity, increase patient flow and optimize care.

Value-based contracts must integrate data from multiple stakeholders to coordinate evidence-driven care for better outcomes and cost control. 

CrossBridge’s value-based collaboration capabilities

CrossBridge is leading the way in facilitating chronic autoimmune value-based contracts. When therapy/diagnostic reimbursement is based on clinical and cost performance with actual patients, CrossBridge’s integrated data and analytic platform ensures that pricing is data-driven, transparent, reproduceable and based on measurable benefits.

Key components of CrossBridge’s platform:

  • Evidence-based clinical pathways guide care planning and monitoring. Our pathways are built on medical society guidelines, the latest peer-reviewed research, clinical practice and RWD. Agreed pathways are seamlessly integrated in clinician workflows with easy-to-use dashboards and guidance. Patients experience fewer delays and more consistent treatment.
  • Clinical and financial analytics that integrate and aggregate multiple patient data streams (including robust claims and transformed EHR data).
  • A common platform showing longitudinal views of patient journeys. Our analytics measure compliance with care pathways and support VBCs for chronic conditions.

The CrossBridge platform produces actionable data to optimize treatment plans and identify care gaps. It integrates with current systems via API and measures care quality and outcomes. We operationalize and scale value-based payments with incentives for cost savings and outcome improvements.

How CrossBridge can help you

CrossBridge was founded to improve the model for treating and paying for chronic autoimmune diseases. Our founder, Bill Conlan, was diagnosed with ankylosing spondylitis after 7 years of disjointed, unproductive and non-evidence-based encounters with the healthcare system. He is convinced there is a better way, and that is what CrossBridge has developed. We address underserved specialties treating inflammatory disorders, an often-overlooked disease category as big and expensive as cancer.

Reach out to learn more about bringing better care and lower costs to the treatment of these complex, chronic diseases

  • Contact us for more information
  • Ask us for a demo!
  • Ask for free data analysis of your plan claims as an opportunity assessment.
  • Partner with us to build a pilot project or proof of value.

 

[1] https://avalere.com/insights/avalere-survey-over-half-of-health-plans-use-outcomes-based-contracts

[2] https://payorsolutions.cvshealth.com/insights/a-look-at-specialty-pharmacy-dynamics

[3] https://www.mmm-online.com/home/channel/features/payer-pharma-collaboration-through-value-based-contracts-is-set-to-accelerate/

[4] https://www.evernorth.com/drug-trend-report/utilization-and-costs

[5] https://www.nih.gov/news-events/news-releases/autoimmunity-may-be-rising-united-states

[6] https://www.evernorth.com/drug-trend-report/utilization-and-costs

[7] https://www.certara.com/app/uploads/2020/09/Key-Trends-in-US-Specialty-Pharmacy-email.pdf p20-21

[8] https://crossbridge.com/chronic-autoimmune-disease-a-hidden-high-risk-high-cost-subpopulation/

[9] https://www.premierinc.com/downloads/C-Suite-Survey-VBC-Infographic.pdf

[10] https://www.drugchannels.net/2020/07/cms-best-price-proposal-and-copay.html

[11] http://phrma-docs.phrma.org/files/dmfile/PhRMA-Value-of-Value-Based-Contracts1.pdf

[12] https://www.lek.com/sites/default/files/PDFs/2263_value-based-contracts.pdf

[13] https://www.ahajournals.org/doi/full/10.1161/CIRCULATIONAHA.119.041974

[14] https://www.kff.org/polling/

[15] https://www.cognizant.com/Resources/everest-group-effective-value-based-contracting-in-life-sciences-cognizant.pdf

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