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The American Journal of Managed Care February 2019
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Value-Based Arrangements May Be More Prevalent Than Assumed
Nirosha Mahendraratnam, PhD; Corinna Sorenson, PhD, MHSA, MPH; Elizabeth Richardson, MSc; Gregory W. Daniel, PhD, MPH, RPh; Lisabeth Buelt, MPH; Kimberly Westrich, MA; Jingyuan Qian, MPP; Hilary Campbell, PharmD, JD; Mark McClellan, MD, PhD; and Robert W. Dubois, MD, PhD
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Value-Based Arrangements May Be More Prevalent Than Assumed

Nirosha Mahendraratnam, PhD; Corinna Sorenson, PhD, MHSA, MPH; Elizabeth Richardson, MSc; Gregory W. Daniel, PhD, MPH, RPh; Lisabeth Buelt, MPH; Kimberly Westrich, MA; Jingyuan Qian, MPP; Hilary Campbell, PharmD, JD; Mark McClellan, MD, PhD; and Robert W. Dubois, MD, PhD
We surveyed biopharmaceutical manufacturers and payers to understand the prevalence and characteristics of value-based payment arrangements, as well as their implementation obstacles and success factors.
ABSTRACT

Objectives: To better understand the prevalence of US value-based payment arrangements (VBAs), their characteristics, and the factors that facilitate their success or act as barriers to their implementation.

Study Design: Surveys were administered to a convenience sample of subject matter experts who were senior representatives from payer organizations and biopharmaceutical manufacturers. These data were supplemented with qualitative interviews in a subsample of survey respondents.

Methods: Descriptive statistics, including percentages for categorical values and mean (SD) and median (interquartile range) for continuous variables, were assessed for quantitative questions. Trained reviewers collated responses to free-text survey questions and the qualitative interviews to identify themes.

Results: Of the 25 respondents, 1 manufacturer and 4 payers reported not having explored or negotiated any VBAs. Subsequently, questionnaire results from 11 biopharmaceutical manufacturers and 9 payers who had experience with VBAs were analyzed. More than 70% of VBAs implemented between 2014 and 2017 were not publicly disclosed. Furthermore, although consideration of VBAs as a coverage and payment tool is increasing, VBA implementation is relatively low, with manufacturers and payers reporting that approximately 33% and 60% of early dialogues translate into signed VBA contracts, respectively. Respondents’ reasoning for VBA negotiation process breakdowns generally differed by sector and reflected each sector’s respective priorities.

Conclusions: This study reveals that the majority of VBAs are not publicly disclosed, which could underestimate their true prevalence and impact. Given the effort required to implement a VBA, future arrangements would likely benefit from a framework or other evaluative tool to help assess VBA pursuit desirability and guide the negotiation and implementation process.

Am J Manag Care. 2019;25(2):70-76
Takeaway Points

Little information is publicly available about the number and characteristics of value-based payment arrangements (VBAs) between biopharmaceutical manufacturers and payers, as well as the underlying reasons organizations do or do not enter these arrangements.
  • Previous estimates of VBAs, using only publicly available data, likely underestimate how many VBAs are currently being implemented.
  • Given the effort required to implement a VBA, future arrangements would likely benefit from a framework or other evaluative tool to help assess VBA pursuit desirability and guide the negotiation and implementation process.
The US health system faces increasing pressure to improve patient access to highly effective, yet costly, therapies. In line with the broader policy shift toward alternative payment models for healthcare delivery, there is ongoing interest amongpayers and manufacturers in exploring value-based payment arrangements (VBAs) for pharmaceuticals and medical devices. VBAs, also referred to as “outcomes-based contracts,” “performance-based contracts,” or “risk-sharing agreements,” link coverage, reimbursement, or payment for a product to a prespecified clinical or financial/utilization outcome or set of outcomes. VBAs can include contractual arrangements among manufacturers, payers, and providers to achieve these aims. For example, such arrangements could entail a rebate provided by the manufacturer to the payer when a drug or device does not perform as expected.1 VBAs have been discussed in the media and in the academic literature for drugs that treat hyperlipidemia, chronic heart failure, rheumatoid arthritis, and osteoporosis, among others.2-4

Despite growing interest in and discussion of VBAs, there is relatively limited information currently available on the extent to which these arrangements are being pursued. A lack of public knowledge of these arrangements could (1) underestimate their use in the market and (2) limit what could potentially be learned from current experience that would advance the design and implementation of successful VBAs in the future. Recent research based on publicly available information suggests that a relatively small number of VBAs have been implemented in the United States (approximately 26), pointing to a range of contractual, procedural, and regulatory barriers that could impede their pursuit and implementation.3,4 Another study found that among 35 payers and 30 manufacturers, the average numbers of total pending/executed VBAs were 5.1 and 3.5, respectively, between 2012 and 2017.5 This study aimed to better understand VBAs in the United States, including both public and nonpublic arrangements, with a particular focus on gaining insights into their negotiation, operationalization, and impeding or success factors from the perspectives of manufacturers and payers.

METHODS

Study Participants

This study used 2 data sources: an online survey and in-depth qualitative interviews. Target survey participants were subject matter experts from a cross-section of payer and biopharmaceutical companies and were identified through a snowball sampling technique based on existing working relationships, recommendations from others within the field, and internet searches. Senior representatives from 38 payer organizations and 37 biopharmaceutical manufactures were invited to participate between September 2017 and January 2018. Of those invited to participate, 26 representatives (13 each from biopharmaceutical and payer organizations) agreed to participate in the survey (response rate, 35%). Respondents were contacted for clarification when necessary to ensure validity of responses. Subsequently, 1 biopharmaceutical company’s responses were excluded due to a lack of response consistency, resulting in 25 analyzed respondents. Qualitative interviews, conducted with a subsample of survey participants, included 3 payers and 5 manufacturers. Study participants were not compensated for their participation.

Data Collection

First, we conducted an online survey using Qualtrics (eAppendix A [eAppendices available at ajmc.com]). This survey, informed by a literature review and expert opinion, was designed to assess the key characteristics and proportion of public and nonpublic VBAs pursued between 2014 and 2017, as well as the factors that led to successful or, alternatively, challenged arrangement implementation. To guide exploration of VBA pursuit, we developed a process map describing 4 phases whereby manufacturers and payers (or providers) negotiate the terms of the arrangement, including (1) internal assessment and information gathering, (2) early dialogue, (3) formal negotiation, and (4) contract implementation (eAppendix B). The process map and the survey were piloted and refined based on feedback from 5 experts representing both payer and biopharmaceutical organizations. Second, we conducted in-depth qualitative interviews with a subsample of survey respondents to expound upon key survey findings and address any gaps in information collected in the first phase of the study.

Data Analysis

Descriptive statistics were assessed for each survey question by sector, including percentages for categorical values and mean (SD) and median (interquartile range) for continuous variables. A trained senior researcher (E.R.) collated responses to free-text survey questions and the qualitative interviews to identify key themes and substantiate main findings from the quantitative analysis, which were then vetted by the research team.


 
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