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NEHI Recommends Implementing Value-Based Contracts With High-Cost Oncology Treatments
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NEHI Recommends Implementing Value-Based Contracts With High-Cost Oncology Treatments

Smita Jaggernauth, PharmD
A new white paper from the Network for Excellence in Health Innovation encourages the use of outcomes-based contracting for novel oncology drugs.
Perhaps the greatest obstacle impeding patient access to the newest, most cutting-edge cancer drugs is the high cost associated with them. Although several of the newer oncology drugs are backed by strong clinical evidence and have demonstrated promising real-world outcomes, payers remain reluctant to finance these costly drugs for consumers.

In response to this growing issue, the Network for Excellence in Health Innovation (NEHI) has encouraged the use of "value-based" or "outcomes-based" contracting for oncology drugs. The principle behind this innovative idea is that drug manufacturers can negotiate pricing with payers based upon whether or not their products lead to either better clinical outcomes or financial outcomes. Within the current reimbursement model, drug manufacturers negotiate drug pricing with payers based upon more tangible, but less impactful factors, such as the total quantity of a specific drug purchased. The proposed system provides a stronger motive for pharmaceutical manufacturers to switch from relying solely on valuations based on dollar amounts and more towards evaluating overall clinical outcomes.1

“We are in the midst of a revolution in cancer care in which new, more personalized drugs will help many patients, but at high cost,” Susan Dentzer, NEHI’s president and chief executive officer, said in a statement.

While this cost-containment model is presently in the infancy stage, it has already begun attracting key stakeholders within the American insurance industry. CMS has agreed to enter into a contract with Novartis for its pediatric leukemia drug, Kymriah, which is the first CAR T-cell therapy approved in the United States. Despite this progress, there are several other obstacles that must be overcome before this payment model can become fully integrated into American society. 1

In a white paper published on October 2017, NEHI reevaluated many of the major challenges facing value-based contracts and offered targeted strategies that may help ease the transition as these arrangements are implemented. Its recommendations are as follows:2

Recommendation 1: Standardize and sharing cancer data to better execute value-based contracts.
Recommendation 2: A diverse group of stakeholders should develop a set of patient-centered and patient-reported measures.
Recommendation 3: Finalize FDA guidance on communication among manufacturers, payers, and other entities, such as off-label information or potential new indications.
Recommendation 4: Provide accommodations to Government Best Price and other price reporting requirements to prevent unintended consequences of implementing value-based contracts, such as triggering deeper rebates.
Recommendation 5: HHS should develop new safe harbors to the Anti-Kickback Statute to enable activities that support value-based contracting, such as collection of data and services to support care coordination.
Recommendation 6: HHS should also develop guidance on HIPAA compliance that allows sharing protected health information in order to successfully implement value-based contracts.
Recommendation 7: Explore new long-term financing approaches for high-cost therapies and cures in major disease states.

In order for a value-based contract system to function optimally in the United States, these issues presented by NEHI must be adequately addressed and these recommendations should be implemented.  


1. NEHI urges prompt action to enable value-based contracts for innovative, high cost cancer therapies [press release]. Network for Excellence in Health Innovation website. Published October 24, 2017. Accessed November 2, 2017.

2. Dentzer S, Hubbard T. Value-based contracting for oncology drugs: a NEHI white paper. Network for Excellence in Health Innovation website. Published October 24, 2017. Accessed November 2, 2017.

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