Number of value-based contracts continues to rise

Michelle Drozd
Michelle Drozd August 27, 2018


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The list of publicly announced value-based contracts (VBCs) – also called results-based contracts – between biopharmaceutical companies and health plans continued to grow over the last quarter – from 39 to 43 contracts. In reality, this is a conservative estimate, as this list doesn’t include the many contracts that have been implemented without being publicly announced.

There’s reason to believe this growth in VBCs will continue. A recent survey from Avalere indicates that over a quarter of all health plans have a VBC in place, and 85 percent of those health plans are interested in pursuing additional contracts. Additionally, one-third of health plans are considering entering into a VBC for the first time.

A growing body of research demonstrates the tremendous promise that these contracts – which tie reimbursement for medicines more closely to patient outcomes – hold in reducing health system and out-of-pocket costs and improving access and outcomes for patients. According to the same Avalere survey, 74 percent of health plans report seeing cost savings as a result of their VBCs—a significant increase compared with the 33 percent reporting savings in 2017.

It’s not just health plans saving money. A recent analysis of commercially insured patients shows that out-of-pocket costs for medicines were, on average, 28 percent lower for patients in health plans with VBCs than they were for those in plans without these types of payment arrangements.

It’s critical that we address legal and regulatory barriers limiting the scope and scale of VBCs to promote greater uptake of these new approaches to payment. Recently, the U.S. Food and Drug Administration (FDA) finalized two guidance documents that clarify biopharmaceutical companies’ ability to share certain information, including health care economic information with insurers and health systems, and information consistent with FDA-required labeling. This guidance may help facilitate value-based contracting, which, in turn, may result in costs savings and increased access. Thanks to these final FDA guidance documents, two key regulatory barriers to VBCs still remain:

  • The federal Anti-Kickback Statute is broadly written and, while intended to deter health care fraud, may also thwart beneficial, innovative VBCs; and
  • Dated and complex Medicaid price-reporting rules for calculating “best price” that were not created with innovative VBCs in mind and can pose an obstacle for some arrangements.

Learn more at www.PhRMA.org/value-collaborative.

Topics: Out-of-Pocket Costs, Value-Driven Health Care, The Value Collaborative