Advancing Value-Based Contracts for Biopharmaceuticals
"Value-based contracting alone isn’t likely to be the sole solution to the coming tidal wave of innovative, high-cost treatments — not just for cancers, but for other conditions. Alternative approaches to financing them are needed, especially for public programs like Medicare and Medicaid. Congress should require the National Academy of Medicine to study alternatives and report back on options. After all, there are problems worse than coping with the coming wave of high cost, often highly effective drugs — such as having a world without them."
Susan Dentzer, NEHI President and CEO
"Although these arrangements alone won’t address the challenges of paying for costly new medications, they are an important arrow in the quiver, especially for cancer drugs."
Value-based contracting is an emerging strategy under which payers and biopharmaceutical manufacturers agree to specific terms that tie payment to results, and that compensate manufacturers based on whether they obtain improved patient outcomes, or better financial outcomes, from the successful use of drugs in patients.
NEHI recommends a combination of strategies to foster innovation and experimentation in value-based contracting, address operational challenges, undertake appropriate legislative or regulatory relief, and anticipate broader challenges stemming from a coming wave of high-cost therapies.
NEHI URGES ACTION TO ENABLE VALUE-BASED CONTRACTS FOR INNOVATIVE, HIGH-COST THERAPIES
Read the white papers that NEHI published in 2017.
VALUE-BASED CONTRACTING
CONSENSUS DEFINITION: Stakeholders should develop a consensus definition of value-based contracts,including contract parameters that will qualify a contract for appropriate protections under federal law and regulation.
GOVERNMENT HEALTH PROGRAM DRUG PRICE REGULATION: CMS should provide reasonable accommodation under Medicaid Best Price and related regulations to allow for thoughtful experimentation with value-based contracts (e.g., to allow “money-back guarantee” or “no charge” contracts without triggering mandatory government price reductions).
ANTI-KICKBACK STATUTE: The Office of the HHS Inspector General should create appropriate safe harbor protections that would allow biopharmaceutical manufacturers to undertake three types of activities in support of value-based contracting: provide data and analytics, make warranties of performance, and supply medication adherence support services and interventions.
FDA & COMMUNICATIONS: The FDA should finalize guidance on pre-approval communications from manufacturers to payers and communications about cost-related data (“health care economic information”). The FDA should also consider issuing guidelines for communication of off-label information that is consistent with approved uses of a drug – for example, information about patient-reported outcomes.
DATA EXCHANGE: The HHS Office of Civil Rights should provide guidance on
exchange of protected health information, in compliance with HIPAA, that is needed to execute value-based contracts.
ANTICIPATING CHALLENGES: Congress should request a National Academy of Medicine study to consider other potentially complementary approaches for financing high-cost, breakthrough therapies.
NEHI LIVE! VALUE-BASED CONTRACTING IN ONCOLOGY: A DISCUSSION ON NEW PAYMENT ARRANGEMENTS
This special NEHI Live! on October 26, 2017, explored the prospects for value-based purchasing in oncology. NEHI President and CEO Susan Dentzer moderated the discussion with Claire Brunken, Executive Director of Outcomes Projects for Novartis, and Dr. Michael Sherman, Chief Medical Officer and Senior Vice President of Harvard Pilgrim Healthcare.
CONTACT NEHI ABOUT VALUE-BASED CONTRACTING
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NEHI is a national nonprofit, nonpartisan organization composed of stakeholders from across all key sectors of health and health care. Its mission is to advance innovations that improve health, enhance the quality of health care, and achieve greater value for the money spent.
