VBCs: Are They Working?
Are value-based contracts actually improving patient access to new medicines?
As an observer, it can be difficult to find out what’s happening with value-based contracts (VBCs). The fanfare that accompanies the announcement of a deal invariably gives way to a long period of silence, a good sign if you subscribe to the mantra that no news is good news, but if you don’t, there is cause for concern.
The smattering of reports on the topic suggest that green shoots are emerging. A recent survey of 120 payers conducted by the ORC International and commissioned by Change Healthcare, found that payers reported an average saving in medical costs of 5.6% from VBC strategies with an accompanying 77% improvement in care quality, provider relationships and patient engagement.
Yet, the same report highlighted ambivalence; more than half of payers reported dissatisfaction with current analytics, automation and reporting. On balance, Dan Leonard, President and CEO of the National Pharmaceutical Council (NPC), is optimistic. “We hear from payers and manufacturers that the impact is either neutral to positive in terms of improving patient access to treatments. There are very few negative reports out there,” he says.
That said, you can only measure what you know about. “Our study found that for every public contract we are aware of there are three we’re unaware of. Most of these agreements are not publicly announced; if we only know about one in every four contracts then we could be underestimating the prevalence and potential impact of these arrangements in the market, as well as our progress in moving from a volume-based health system to a value-based one.”
The peer-reviewed study Leonard refers to is a survey conducted by the Duke-Margolis Center for Health Policy and supported by the NPC, set to be published next year. It surveyed the experiences of payers and manufacturers with value-based contracting between 2014 and 2017. While the general sentiment from aggregated feedback on nearly 200 value-based contracts was that they are improving adherence, when it came to the other barometer of success – improving access to innovative medicines – respondents merely felt they were only “in a position to assess this question more formally as they go forward”.
Ups and Downs
Granular insight is like gold-dust, says Nick Taylor, National Practice Leader, Consulting Services, at The Segal Group. “[Success] has really been around hepatitis C and some of the different contracting with that category, particularly as it’s a short-term treatment, 8 to 12 weeks, up to 24 weeks. Drugs that cure the disease aren’t the issue.”
He points to the many VBCs agreed in response to the rise of diabetes in the US – with a strong focus on the prevention of cardiovascular events – where no results have yet been published. “I have never seen reporting on chronic medications and the particular categories — diabetes, asthma and multiple sclerosis have the longest contracts, they have been out there for a couple of years.”
In the NPC survey, one of the top reasons given for why negotiations broke down was a lack of data infrastructure. “Payers and manufacturers don’t have the infrastructure they need to collect the data and process it to produce an outcome measure for use in a contract. More work needs to be done on the data infrastructure side,” says Leonard.
Trust between parties also remains an issue. While there is an inherent element of good faith in these transactions, how does each side know the other will deliver the goods? “VBCs are often multi-year commitments so it’s important that both sides stick to those commitments through the course of the contract,” he says.
Ready, Steady… Wait
Commitment cannot always be guaranteed; the job market is not static, people move around. If you strike a deal with an employer, you cannot guarantee employees will stay on the plan and so your study population can shrink over time.
So, how long should you wait to see success? “One recently announced [VBC] for a diabetes drug was around cardiovascular effects; it’s been shown to have an increased preventative measure and cardiovascular events. But how long does that tak? If you take it for a year, do they chalk it up to success that you didn’t have a heart attack in a year? What about three years, five years or seven years?”
The burden of commitment is somewhat lessened by the fact that no money initially changes hands, adds Taylor. Since PBMs and carriers are not charging payers for these programs, these deals are purely contractual until enough data is gathered.
Simplicity or lack thereof is also a sticking point. “It’s important that contracts are not so overly complicated that they become too cumbersome to implement, says Leonard. There are also wider institutional hoops to jump through. Leonard lists a number of legal barriers including Medicaid best price issues and anti-kickback statute issues.
For example, manufacturers could institute programs aimed at giving the patient the best chance of successful treatment, including patient education, nurse coaching, case management support, benefit assistance, adverse event monitoring, and outcomes monitoring. The current anti-kickback statute though threatens large penalties for providing anything of value that could be seen as driving business their way.
“Contractual barriers related to the financial terms or incentive mechanisms create some of these barriers that are challenging to address,” adds Leonard.
Turn That Frown Upside Down
More recently, institutional actors have intervened, with FDA guidance issued to clarify some of the language around FDA reporting requirements. “This is important because up until now the guidance has been murky around whether manufacturers could even have some of these conversations with payers if they strayed off the label of a particular medication,” says Leonard.
Defining the parameters of what’s possible, should facilitate greater dialogue between payers and manufacturers. Health & Human Services (HHS) is also requesting public feedback relating to the anti-kickback statute, he adds. “They are in the field right now soliciting input. It’s another sign that the government is taking it seriously, and that they might be able to make some changes to the ethics statute.”
For now, Taylor is subscribed to the ‘no news is good news’ approach. “It takes time. Don’t expect immediate results. There has to be some comfort level with how the data is reviewed and how it is shared first. You have to get over those hurdles.”
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