Unbiased Analysis of Today's Healthcare Issues

Outcomes-based contracts: Where are we now?

Written By: Jason Shafrin - Oct• 15•17

“Value” is the latest trend in health care.  However, how does value get integrated into reimbursement?  One approach to tying value to prices is through and outcomes based contract (OBC) where the reimbursement for a drug will depend on the real world outcomes experienced by the relevant patient population.

A study by Nazareth et al. (2017) aims to examine the number of outcomes-based contracts through targeted literature review, University of Washington’s Performance Based Risk Sharing (PBRS) database, and interviews with payers.  They find:

With approximately 10 OBCs per year implemented over the last 5 years, Italy was at the forefront of OBC activity at the national level, closely followed by Spain and Germany. The United States has been increasingly following suit, with several individual participants reporting up to 4 OBCs implemented over the last 5 years.

The United Kingdom and CMS in the United States are 2 notable exceptions in terms of OBC activity. In the United Kingdom, after 5-6 OBCs were implemented in the early 2010s, no additional OBC activity was reported through 2015….In the United States, manufacturers, payers, and CMS are expressing greater interest in new contracting models. For example, CMS has been an early proponent of programs aimed at determining coverage for new health technologies through coverage with evidence development. CMS has expressed interest in exploring performance- or value-based payment for pharmaceuticals.

Another paper by Yu et al. (2017) conducts a systematic literature review of publicly available OBCs [or what they call performance-based risk sharing agreements (PBRSAs)–and finds that “26 publicly disclosed PBRSAs were identified. Of these, 16 (62%) were announced or initiated from 2015 to 2017, and 10 (38%) were announced or initiated from 1997 to 2012.”

However, the list of publicly known OBCs greatly understates the true number of OBCs.

The publicly available literature appears to greatly understate the actual level of OBC activity when compared with the activity reported by the interview participants in the past 5 years. For example, in the United States, while the targeted literature review identified only 3 OBC drug schemes in the past 5 years, some interviewed stakeholders reported enacting up to 4 OBCs over the same period (i.e., each of these research participants reported more than the total reported in the literature).

Another study by Goble et al. (2017) found that interviewed payers found that “A total of 51 PBRSAs were active among respondents at the time of the survey.”

Most survey respondents believed that there would be more OBCs over the coming decade, so the benefits and challenges of tying prices to real-world outcomes is likely to stay.

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