Value-Based Contracts Rely on Trust, Real-World Data to Improve Patient Outcomes
In a recent panel session at Asembia’s 2018 Specialty Pharmacy Summit, “‘Value’ is in the Eye of the Beholder – What is the True Value of Value-Based Contracts,” Jim Clement from Aetna, Joseph Coppola of Deloitte Consulting Life Science Practice, Alex Krikorian from Anthem, and Robyn Peters from Diplomat, discussed the benefits and challenges of value-based contracts.
According to findings from Deloitte, the overall strategy of creating a successful contract begins with product selection, followed by a cost and value analysis, targeting stakeholders, and then determining the contract design. According to Mr Coppola, this process will help determine how to implement and execute that plan on the operational side of the spectrum.
Mr Coppola explained that there is no one-size-fits-all regarding these contracts because each outcome is going to be different. Further, he said to put yourself in the shoes of the stakeholder you are working with and ask yourself what is the business model, how do they define success and how do they make money. By doing that, you can better understand the value of working together. He also explained that engagement with a stakeholder should be on a different level than with the organization.
“A value-based contract requires trust, ultimately” said Mr Coppola. “It is a collaboration that is more strategical.”
Understanding Your Contracting Partners
The first question asked to the panel was, “How important is it to really understand the business model of the entities you are contracting with, and really understand what they value? Are there any barriers?”
According to the panelists, it is very important to know where the stakeholder position is in the market and supply chain, and where they are placed in overall health care system—it is important to assess what delivers value to them, specifically.
“What delivers value is going to be different to all of the parties,” said Mr Clement. “Value has to stem with the patient at the center. We are all here with the patient in mind.”
He continued, “We have to operate under the assumption—at least for pharmaceuticals— that the manufacturer and the payer are representing the best and same interest in the patient which is a positive outcome. Ultimately that will deliver the best outcomes.”
“The traditional approach at defining value and delivering value has been from a carrier and employer standpoint as to the size of their district,” explained Mr Clement.
He explained that companies may be missing the concept of these contracts. He said that there is no reimbursement that should be expected because the drug works for the patient population. They will see savings in reduced medical spending. He said that companies are in the “wrong mindset” because they believe a drug will not work so they should receive a larger discount.
Similar to Mr Clement, Ms Peters added that “it totally has to start at the beginning with all parties wanting to improve patient care and patient outcomes.”
Ms Peters pointed out that during the discussion of beginning a value-based contract, transparency is vital.
“The partners you are seated at the table with, you need to trust them,” she said. “You need to be very open with not only what are your value drivers, but also what are your risks.”
According to Ms Peters, often times these deals go “sideways” because the parties are not transparent.
Mr Krikorian stressed that it is very important during these initial discussions to fully understand what is the value to the client and to the patient.
“If there is no value there, then why are we doing this?” he asked. However, he explained that he is optimistic that these contracts will be successful.
Defining Value
Mr Coppola then moved to his next question, “What would you say are the key success factors to ensure that these value definitions are understood?”
Similar to the beginning of the discussion, Mr Clement explained that trust is one of the biggest factors for a successful partnership followed by organizational limitations. He explained that these contracts were put to use very quickly, and that there is a long way still to go with them.
“We thought that this model could serve as a replacement to the current pricing discount model. Because it is obviously broken for a number of reasons,” Mr Clement said.
However, he said that what has been gained is much bigger. It is about figuring out what value really is. “The real definition of value is the service you don’t pay for. That is what these contracts are really aimed at being.”
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According to Ms Peters, a key to success in these contracts is to actually remove the commercial team from the decision-making process.
“The clinical and medical provider teams really know these [patient] journeys best,” she explained. “And often what’s on a payer side and what’s often on a pharma side, the data is radically different.”
Mr Krikorian explained that the use of real-world data is a true key factor to success with these contracts.
“There is some benefit to these things and looking at real world information,” he said. “I think there is feedback to the pharma manufacturers where they can make some adjustments to either price per model depending on the delivery on what the delivery of those outcomes are in the real world.”
He continued that he believes these contracts will have value when more orphan drugs and more expensive drugs come to market. He said that value-based contracts and agreements for rare diseases will provide value of orphan drugs which will lessen costs.
Patient-Centered Value-Based Contracts
Mr Coppola then changed the direction of the session and asked, “In your view, how are patient advocacy groups helping shape the value discussion, and how are they influencing the definition of value and ultimately coverage decisions?”
Mr Clement said that these groups are actually helping with the patient journey and are enhancing the conversation and the way we take care of patients by disease state.
“I think when patient advocacy groups are working their best, they are helping us understand what that patient journey looks like and what that episode of care looks like and the uniqueness of the disease state,” he said.
He said that they are communicating “what good looks like” for these patients.
Similarly, Ms Peters agreed that these groups understand the burden on both the patient and the caregiver, and they have clear mind of sight often into funding in the number of other areas making it easier for patients to stay on drug, or start and stay on drug.
Further, Mr Krikorian said to not forget about physician groups along with these patient advocacy groups. The physician groups also work to keep patient interests in mind as well as provide guidance on different therapies.
“It has to be in alignment,” he said. “We are looking for affordability, we are looking for better outcomes, and as long as each groups are following those tenants, and acting in the best interest of everyone in the value shape, I think they can be quite powerful.”
Harnessing Data & Technology
The panelists discussed the importance of harnessing the technology that is available. Value-based contracts are complicated and Mr Clement said that even the simplest contracts can be complicated.
They agreed that it is important to look at the analytics and understand why some drugs are performing well. Further, it is important to evaluate the data collected up front to not only understand the contract and the goal of the contract, but to also try to see where the gaps are before contract negotiations.
“Before singing one of these contracts, have you looked at your data, have you measured it?” Mr Krikorian asked. “I think a key thing here before anything is executed is to run through your information and understand if you have the critical mass that speaks enough to the entire population to say this [particular] population is going to be representative of the entire population? Because you are not going to be able to measure everybody at 100% and run through the back system to try it and see if you have the information to see where the gaps are ahead of time.”
Mr Krikorian concluded by saying that it is important to know what you have ahead of time so the stakeholders and everyone involved in the contract decision does not have their time wasted.
—Julie Gould
