A rush of headlines may make it seem as if value-based contracting is taking over the pharma industry as health systems grapple with high drug costs. But a new survey from PwC finds the pricing model has yet to take off in any major way.
Only a quarter of pharma execs surveyed by PwC’s Health Research Institute have tried a value-based contract, according to the report (PDF). But though only a minority of companies are testing the waters, PwC finds they are having an “outsized influence on trade industry messaging and new policy proposals.”
Drugmakers such as Amgen, Sanofi, Novartis, and Merck & Co. have each inked value-based contracts with payers, and Express Scripts has a variety of arrangements in place, but PwC’s research says the model still has a ways to go to until it reaches widespread adoption.
As things stand, 38% percent of pharma execs feel the risks of value-based contracting are worth the benefits. In concept, 71% of drug execs believe the pricing model could help patient outcomes while rewarding innovation, according to the report, based on PwC’s survey of 101 pharma execs and 100 health insurance execs.
On the insurance side, each of the United States’ top 5 players has tried at least one value-based contract. Smaller insurers Harvard Pilgrim and Advocate Health Care have inked more than one deal apiece, according to the report, as has Optum Rx.
One vocal advocate for innovative contracting and pricing is Express Scripts chief medical officer Steve Miller, who spoke with FiercePharma in July about the company’s cost-fighting strategies. Express Scripts has introduced indication-specific pricing in cancer and inflammatory conditions, he said, to make the “best agents available to our patients, but also the least expensive agents when biosimilars come to market.”
Express Scripts is also getting refunds if patients switch drugs within a designated time frame.
For patients who change anti-inflammatory drugs in the first 90 days, drug companies pay back two-thirds of the cost, Miller said. If a drug costs $3,000 per month and a patient switches after one month, the refund is $2,000. After two months, the refund would be $4,000. Essentially, he said, it’s a “warranty” that “allows patients and doctors to have a broad list of drugs that’s available to them.”
In oncology, the company secures rebates if patients switch within 30 days.
“The goal has to be better patient outcomes and lower costs,” Miller said. “These programs give the pharma manufacturer and Express Scripts the opportunity to work together to drive those two goals.”
Even though value-based pricing hasn’t made its way to the mainstream quite yet, according to PwC’s findings, the group notes that pricing pressure is “coming from every direction.” That pressure could force companies to adapt and further justify their prices. The group also notes that experimenting with contracting in the U.S. could assist with new launch strategies in emerging markets.
By Eric Sagonowsky
Source: Fierce Pharma
Big Pharma has long seen the potential for AI and machine learning to accelerate drug development. But Novo Nordisk is going a step further by channeling $200 million toward the creation of a computer that will outrun anything in existence.
Current methods for diagnosing Alzheimer’s disease rely on a complex combination of self- and caregiver-reported symptoms, a physical examination and either a PET scan or a spinal tap to look for evidence of amyloid plaque build-ups in the brain. But a new artificial intelligence-based method may make the diagnostic process a much more objective one.
There is lots of talk about diversity and inclusion in business, including in pharma and medtech. A new report by the Open Political Economy Network (OPEN), a think tank focusing on migration and diversity, released its “Minority Businesses Matter: Europe” report highlighting the successes and challenges of ethnic minority-owned businesses in Europe.