Value-Based Contracts Face Legal, Operational, and Adherence Barriers

With growing competition, rising drug prices, and the broad generics market, stakeholders are demanding measurable “value” in medicinal products. While multiple deals—risk-sharing agreements or value-based contracts—are currently in place between health plans and drug manufacturers, several underlying issues can create roadblocks.

Real-world evidence is being used to develop value-based contracts that determine the relative cost-benefit of pharmaceutical products. The past 2 years has also seen the emergence of value frameworks, which have been crafted by experts from several organizations, including:

• The American Society of Clinical Oncology
• The Institute for Clinical and Economic Review
• The National Comprehensive Cancer Network
• American College of Cardiology and the American Heart Association

Just last week, FasterCures and Avalere released version 1.0 of their Patient Perspective Value Framework.

Some of the value-based contracts currently in play include:

• Outcomes-based contracts, which are designed to tie costs or outcomes to patient outcomes
• Indication-specific pricing contracts, where payments vary based on efficacy of different indications
• Expenditure-cap contracts, which limit drug costs to a certain negotiated threshold

There has been a spike in these contracts in recent years, with 16 risk-sharing contracts announced publicly between 2015 and 2017, including contracts for drugs used in treating hepatitis C, diabetes, and cholesterol. Early last year, Cigna signed contracts with both Amgen (manufacturer of evolocumab, Repatha) and Sanofi-Regeneron (alirocumab, Praluent) for their anti-cholesterol PCSK9 inhibitors that aligned payment with patient response to their respective drugs. And exactly a year later, Amgen signed another risk-sharing contract with Harvard Pilgrim: the company will refund all eligible patients who suffer a heart attack or a stroke when taking evolocumab.

The 2 parties also have a risk-sharing agreement for the anti-inflammatory drug etanercept (Enbrel), indicated for rheumatoid arthritis. Per the contract, patients who do not score a predetermined threshold score yield a lower reimbursement for Amgen.

Express Scripts, Prime Therapeutics, and CVS Health are some other payers that have entered similar outcomes-based contracts with drug manufacturers.

However, according to a survey conducted by the Pharmaceutical Research and Manufacturers of America earlier this year, stakeholders are faced with significant legal/regulatory and operational barriers. About 64% of respondents to the survey were concerned with the impact of the contract on price reporting metrics such as Medicaid Best Price and Average Manufacturer Price, along with the anti-kickback statute (46%) and FDA regulations on clinical or economic outcomes claims (46%). Some of the operational challenges identified included:

• Inability to measure outcomes (75%)
• Payer access to both medical and pharmacy data
• Incentive alignment with payers

Another important challenge is ensuring patient adherence to their prescription regimen, and these have been included in some of the existing value-based contracts. The Amgen—Harvard Pilgrim contract states that patients should adhere to the evolocumab regimen for at least 6 months before a cardiac event occurs.

The adherence factor has been on the industry’s radar for a while now. Health plans recognize that low adherence is a preventable healthcare cost and manufacturers are aware of the loss associated with unfilled prescriptions. For example, health plans can track adherence by monitoring prescription refills via the pharmacy claims data and ensure their enrollees stay on track with their medications.