Strategies To Address The Challenges Of Outcomes-Based Pricing Agreements For Pharmaceuticals

With major reforms of U.S. health policy likely in the coming years, the future of the health care system is uncertain. It is highly likely, however, that the increasing focus on a value-based, rather than volume-based, system will continue. Given major public concern about the costs of pharmaceuticals, there is a particular need to tie reimbursement to value in the drug space. Stakeholders frequently discuss outcomes-based pricing agreements (OBAs) as a promising alternative to traditional drug pricing strategies. These arrangements are a type of performance-based risk-sharing, in which prospective clinical outcomes data are used to link a drug’s price to its real-world efficacy. Outcomes-based pricing arrangements can be structured in various ways. For example, a pharmaceutical company and an insurer may enter into an arrangement in which the drug maker provides a drug to the insurer’s patients at a substantially discounted baseline price. The insurer and the pharmaceutical company then agree on one or more specific, outcomes-based performance targets that, if achieved, would trigger an additional pre-set payment from the insurer to the drug maker. This drug pricing framework, which is comparable to “pay-for-performance” incentive systems used by insurers and health systems, relies on prospectively-gathered clinical data to adjudicate outcomes that trigger performance-based payments. Such payments could be triggered by achievement of an outcome by an individual pati...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Drugs and Medical Innovation Featured drug pricing FDA outcomes data Outcomes-based agreements Source Type: blogs