Jane Barlow of Real Endpoints Gives an Industry Update on Value-based Contracts & What's Working, What's Not | AMCP 2023

Below is a brief exerpt from the interview above. It has been edited for length and clarity.

Q: Where are now with value based contracting, compared to two to three years ago? Has it gained traction or is it more talk than action?

A: I would say it's a mix. So definitely, we're seeing more publicly available. Information about these sorts of contracts. I think that the warranty models that Pfizer announced were really between the manufacturer and more so the patient than the payer was.

We're seeing more of it, I think there's a lot more discussion. But when we ask the payers whether they're implementing more, and the manufacturers whether they're implementing more, there's still a lot of ground to cover. I think of the folks we asked, only about a third had actually implemented a contract, which is undoubtedly going to be a higher number than it was 2,3, 4 or 5 years ago. Though, it's still not anywhere near the industry standard or a tipping point.

Q: Can we point to any value based contracting success stories, or models that show that it can work?

A: One thing to point out is, some of the policy changes that went into effect in summer of '21 kind of paved the way for manufacturers to engage in these contracts with less concerns about the impact for Medicaid best-price calculations. That's also true of the warranty model, where there's been kind of clarification of how that works relative to best price. So I think that the the area continues to evolve, the sophistication around that continues to evolve as where the questions are answered, barriers are removed.

Q: Is there a fundamental problem with value-based contracting, that the value of a drug is often realized over many years?

A: think it makes it challenging for some drugs to engage in a value-based contracts. Iknow there's a lot of discussion around whether we really should be focusing these on true outcome measures, which, as you say, can take years to actually materialize, or whether we should be focusing more on process measures.

Here's my take on it: if someone, for example, starts a chronic medication and stops after two or three months, they're not getting a benefit of that chronic medication. The use that they had is really kind of waste in the system. You can do a value based contract with an outcome measure that's around that discontinuation early. With the idea that there's a lot of reasons why it didn't work. It could be that the patient couldn't tolerate it, it could be the patient couldn't afford it, it could be that the doctor found a better option for that patient. They decided that would be a better treatment to move to. Regardless, it's waste in the system, because the patient didn't get a benefit from it. Right? It's not necessarily anybody's fault.

Ideally, if you know a drug is going to benefit a patient, they'd be started on it and they continue on it. Some will argue that's not really an outcome measure. Well, it's not necessarily a clinical hard outcome for that drug. But it certainly is an outcome for that patient in terms of the value that's received.