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Value-Based Arrangements May Be More Prevalent Than Assumed
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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.
Although patient adherence was frequently used as a VBA component (eg, for patient selection), follow-up interviews suggest that there is uncertainty about whether VBAs improve patient outcomes or benefit patients more broadly, at least in terms of how they are currently designed and executed. For instance, existing VBAs appear to rarely integrate patient-reported outcomes and/or incorporate avenues for patients to share in any savings associated with the arrangement. Greater patient involvement could perhaps address this concern and align with broader efforts to mitigate high patient out-of-pocket costs. As an example, United Healthcare/OptumRx, CVS Caremark, and Express Scripts publicly announced recently that rebates would be directly shared with certain beneficiaries at the point of sale.16-19

Overall, this study suggests that the VBA process is complex, requiring different points of alignment to successfully progress throughout all 4 of the suggested phases. As investment in these contracts by payers and manufacturers continues to increase, further research is needed to understand the scope, processes, and impact of VBAs. The study also highlights additional areas for future research, including the development and collection of VBA outcome measures, incentive mechanisms for participation, and the potential feasibility and impact of provider and patient incorporation into VBAs. However, focusing solely on publicly known VBAs greatly underestimates their prevalence and potential impact in the market, highlighting the need for research on all VBAs in a manner such that organizations can be transparent without disclosing confidential information. More transparent information exchange may also enhance trust among involved stakeholders and broaden participation in VBAs to providers and patients, where warranted. Additionally, more open discourse could help navigate the potential for overlapping contracts to enhance potential collaboration and efficiency of value-based payments.

Considering the various barriers along the path to implementation, it may also be beneficial to develop a tool or guidance document that can help manufacturers and payers assess the desirability of pursuing a VBA and optimize the difficult negotiation process. In particular, such a planning or evaluation tool could outline key components of a VBA (eg, technology characteristics, data collection and outcome measurement plan, level of risk) to consider at different phases of the process, with a view to highlight those features known to facilitate success. Furthermore, given the current diversity in VBAs, including how they are defined and conceptualized, a guidance document or the like could support greater consistency and quality across arrangements, reduce administrative burden, and increase adoption of VBAs throughout the healthcare system. As more information on VBAs becomes publicly available, such a tool or guidance can be refined and/or expanded to accommodate different types of VBAs.

Strengths and Limitations

Although there are several strengths to this study—including that it is the first study, to our knowledge, that focuses on understanding the extent to which these arrangements are being fully disclosed to the public and made transparent —there are limitations. Generalizability of these results may be limited because the questionnaire was administered to a small convenience sample with a low response rate, and the follow-up interviews were conducted on a selection of this sample. Next, although we provided a definition of VBAs and a framework for the negotiation and implementation process, there may be heterogeneity in respondents’ interpretations. Additionally, the questionnaire collected information only on newer VBAs administered from 2014 to 2017 to provide a feasible and realistic range for respondent recall. However, given that we collected information only from 2014 to 2017, we likely have not captured the full trajectory of previous or impending VBAs. Finally, the extent to which there was overlap between the contracts reported by manufacturers and the contracts reported by payers is unknown. To address this limitation, we surveyed a sample of both payers and manufacturers independently to cross-check validity and corroborate responses.


As VBAs are still broadly in the experimental stage, their ability to deliver on their promise (ie, increased value and/or improved patient outcomes) is yet to be determined. However, it is important to recognize the progress made in transitioning from volume- to value-based payment. This study reveals that the majority of VBAs are not publicly disclosed. Focusing solely on publicly known VBAs greatly underestimates the prevalence and potential impact of these arrangements in the market, highlighting the need for research on the proportion of VBAs among more traditional rebate contracts in a manner such that organizations can be transparent without disclosing confidential information. Although many negotiations never lead to a signed agreement, pursuit of these arrangements increasingly occurs between payers and manufacturers, highlighting that value considerations are being incorporated into stakeholder decision making. Our study identified several opportunities to address outstanding barriers to VBAs and further accelerate the transition toward value-based payment for biopharmaceuticals. Given the amount of work required, future negotiations would likely benefit from a framework or other evaluative tool that can help manufacturers and payers to assess the desirability and feasibility of pursuing a VBA for a product.

Author Affiliations: Duke-Margolis Center for Health Policy, Washington, DC (NM, ER, GWD, JQ), and Durham, NC (CS, HC, MM); UNC Eshelman School of Pharmacy (NM), Chapel Hill, NC; National Pharmaceutical Council (LB, KW, RWD), Washington, DC.

Source of Funding: This work was funded by the National Pharmaceutical Council.

Author Disclosures: Dr Mahendraratnam was a University of North Carolina–Bristol Myers Squibb Worldwide Health Economics and Outcomes Predoctoral Fellow during the completion of this work. Dr Daniel receives consulting fees from AbbVie. Ms Buelt, Ms Westrich, and Dr Dubois are employees of the National Pharmaceutical Council, a policy research organization supported by the major research-based pharmaceutical companies in the United States. Dr McClellan is a board member of Johnson & Johnson, Cigna, and Alignment Health Care, LLC. The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (NM, CS, GWD, LB, KW, JQ, HC, MM, RWD); acquisition of data (ER, GWD, JQ, HC, MM); analysis and interpretation of data (NM, CS, ER, GWD, LB, KW, JQ, MM); drafting of the manuscript (NM, ER, GWD, LB, KW, JQ, MM, RWD); critical revision of the manuscript for important intellectual content (CS, GWD, LB, KW, JQ, MM, RWD); statistical analysis (NM, JQ); provision of patients or study materials (MM); obtaining funding (GWD, MM); administrative, technical, or logistic support (JQ, HC, MM); and supervision (GWD, KW, MM).

Address Correspondence to: Mark McClellan, MD, PhD, Duke-Margolis Center for Health Policy, 1201 Pennsylvania Ave, Ste 500, Washington, DC 20004. Email:

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