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Dr Robert Navarro on Pharma Implementing Value, Best Practices for Value-Based Contracts

Pharmaceutical companies have helped in the shift to value-based care through value-based prices, as well as outcomes- and performance-based risk-sharing contracts, explained Robert Navarro, PharmD, clinical professor, College of Pharmacy, University of Florida.


Pharmaceutical companies have helped in the shift to value-based care through value-based prices, as well as outcomes- and performance-based risk-sharing contracts, explained Robert Navarro, PharmD, clinical professor, College of Pharmacy, University of Florida.

Transcript

What are some new approaches pharmaceutical companies are taking to implement value?

In the area of pharmaceuticals and pharmacy benefits, we’re concerned about the rising cost of drugs. Over 50% of the drugs approved by the FDA now are high-cost specialty drugs. Drugs that provide management, and sometimes a cure for diseases for which we did not have in the past, for example CAR T therapies, where we can actually cure cancer at a genetic level. Now, when we consider the cost effectiveness or value of these products, we have to consider the long-term lifetime, even societal, or productivity cost. These are decisions we haven’t made at a healthcare plan or pharmacy benefit manager level in the past. We consider a direct medical cost, what we’re actually paying for, and we typically don’t consider quality of life or long-term societal values.

So, we’ve made some changes, and part of that has been assisted by the pharmaceutical company in coming to the market with drugs with value-based prices. Also, in outcomes- or performance-based risk sharing contracts, where there’s literally a money-back guarantee, that’s a simplistic approach, if the drug fails to perform according to the contract and the labeled indication. So, I think the pharma company has stepped up to some degree in order to help us improve the value by reducing the overall net cost of paying for a disease over a year period of time. For example, the outcomes contracts are very common in the United Kingdom and European Union, of course.  

What lessons have been learned so far about the right and wrong way to set up value-based contracts?

On the surface, performance or outcomes-based risk sharing arrangements with pharmaceutical companies sound like a win-win for both. There is earlier access for pharma companies on drugs, and the payers have some risk sharing by pharma companies, if drugs fail to perform. What we’ve learned is that these contracts are easy to discuss but very difficult to execute, because they rely upon having agreement and access to the data required to measure the outcomes of drugs.

Now, we have some administrative claims data that are easily available. However, we look deeper in terms of the outcomes, and sometimes this data is very difficult to obtain. The other consideration is that patients have a role in this. If patients don’t take their drugs I don’t think the pharma companies can be held responsible for a drug that fails; it’s the patient that failed, not the drug. We know that about half the patients stop taking chronic care medications after about 6 months. So, part of that is a requirement for the patients to take their medication or perhaps an adherence program, or the pharma companies simply require that for any outcomes-based contract payment, patient adherence must be required.

 
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