Dr Ira Klein Outlines the Biggest Challenge of Value-Based Drug Pricing

The healthcare industry is getting better at creating value-based drug pricing arrangements, and even if they never dominate the market, there will always be a place for these contracts, said Ira Klein, MD, MBA, FACP, senior director of healthcare quality strategy for the Strategic Customer Group at Janssen Pharmaceuticals.

Transcript

What are some challenges of value-based drug pricing?

I think the biggest challenge is that of acquiring the appropriate information to make sure that if you're in a value-based agreement, you're hitting your quality marks, your outcomes measures, as well as your cost measures. The sheer difficulty in aggregating data over time in a select population has made it tough to get value-based agreement to become the norm. Because, if you think about the amount of money either saved or lost, if the administrative burden is larger than the gains or losses, then respective parties will decide not to have those agreements in place.

However, I believe that we are learning how to do these agreements in ways that are more administratively efficient, to focus on areas of mutual agreement, where both parties can actually have elements of outcomes and performance that are desired for their end goals, and thus will have some additional value-based agreements in the marketplace.

It may never dominate the marketplace, but it will always be a factor, because it's a signal and a harbinger for other things that need to change in our healthcare delivery world and in the entire supply chain—from manufacturer to [group purchasing organization] to provider to patient.