PhRMA pitches value-based care, skeptics raise flags
- Industry lobbying group PhRMA, in conjunction with Avalere Health, released a report this week contending patient copays in commercial plans using value-based contracts were 28% lower for drugs for certain conditions — including diabetes, HIV, and high cholesterol — compared to copays for these medications in similar plans that did not use risk-sharing arrangements.
- The drugmaker group outlined and defined five distinct contract types that could be possible: outcomes-based, conditional treatment continuation, indication-based pricing, regimen-based pricing and expenditure cap.
- Skeptics said the report should be taken with a grain of salt given the interests of PhRMA in promoting more "value" behind sticker prices.
Drugmakers have been pushing the merits of value-based arrangements for several years, one argument in their arsenal amid rising political and public pressure about steep drug prices. Payers generally like them as well —but the devil is in defining and putting a price on value.
Value-based arrangements hold the potential to cut the cost of medicines, trim overall medical costs as a result of less frequent hospitalizations, and may actually improve outcomes if payers don’t have to foot the bill for suboptimal drug performance, the report contends.
The trade group suggested that with the savings generated from value-based contracts, payers would have the ability to expand access to medications, allowing more patients to be treated.
But the report authors acknowledged that the 28% reduction in patient copays may not have been due to participation in an outcomes-based plan at all, however, suggesting the cost savings were a result of some other phenomenon entirely.
"For the medicines included in these contracts, patient copays from 2015 through 2017 silver-level exchange plans were 28% lower, on average, for medicines when covered by the payers with outcomes-based contracts compared to the market average silver-level exchange plan . . . While it is not clear whether the silver-level exchange plan population was included in the payers’ outcomes-based contract, this finding suggests that outcomes-based contracts can contribute to reduced cost sharing for patients," it said in the report.
Walid Gellad, associate professor of medicine, health policy and management, as well as co-director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, expressed skepticism about the report to BioPharma Dive.
"It will be very important to understand how these outcomes-based contracts impact health and costs. However, this report does not do that—it simply compares plans with traditional contracts to those with outcomes-based contracts without being able to say anything about the actual role of the outcomes-based contract in copayments," he said.
Plus, as mentioned in the report, there are lingering concerns regarding how the arrangements could skew price reporting statistics and if the setups violate anti-kickback laws.
"Patients may also save if rebates are passed onto them or the medicine receives better formulary position and thus lowers cost sharing,” noted the report.
But who is to say the payers will take the savings gleaned from use of these "innovative” contracts and pass them on to members in their plans? Based on other examples in the industry, there is no guarantee that this will actually reduce costs for plan members.
Pharmacy benefit managers don’t always pass savings onto patients or plans, and in the case of 340B-eligible hospitals, benefits received from 340B pricing are not always used to help underserved patients.
While placing value over volume of services is a great drug-pricing idea in theory, another caveat is that the arrangement may only be applicable to certain drugs for specific patient situations.
Drug companies that would likely enter into risk-sharing arrangements are those that are confident that a given medication would work well for a majority of eligible patients. But for drugs that don’t have such a clear-cut benefit—such as those that have contraindications with other drugs commonly used to treat the three conditions included in the PhRMA report—this is not as easy a bet to make.
"This is a PhRMA-funded piece that suggests that if we pay for medication based on value, we’ll get more value. I agree,” said David Weinstock, associate professor of medicine at Dana-Farber Cancer Institute and Harvard Medical School, who has written on innovative payment models in pharma. "It also suggests that PhRMA is 'interested' in this. It’d be more accurate to say that they’ve been compelled to take the momentum toward value-based reimbursement seriously and are likely considering every way possible to work incentive-based systems for maximum profits."
- PhRMA Statement
- Healthcare Dive Payers wade into real-world evidence, but tread lightly