Health Care Economic Information and Its Impact on Value-Based Contracts

Specialty Pharmacy TimesNovember/December
Volume 9
Issue 7

Payers and biopharmaceutical companies are increasingly interested in outcomes-based agreements in which payments for a treatment are based on how well it helps patients meet specific health outcomes.

The exchange of health care economic information (HCEI) is vital in today’s changing health care environment. With a growing focus on determining the value of a treatment, payers and biopharmaceutical companies are increasingly interested in outcomes-based agreements in which payments for a treatment are based on how well it helps patients meet specific health outcomes. These contracts could help combat rising medical costs, gain acceptance for new products among more patients, and share the risk associated with the total cost of care.

However, biopharmaceutical companies are subject to federal laws and regulations that limit what they can say proactively about their products and under what circumstances. But these contracts require detailed information about how effective a treatment is compared with other therapies, whether it will help patients reach quality outcome measures, and its effect on readmissions or the total cost of care, among other questions. Not all of this information is contained in the label approved by the FDA, which is the basis for what is permissible in medical product communications. And until recently, there were prohibitions against, and uncertainty regarding, how and when biopharmaceutical companies could provide that important information to payers.

The exchange of HCEI had been governed by a mere 216 words in the Food and Drug Administration Modernization Act of 1997. Without further regulatory guidance, there was a lack of clarity on what could be shared, with whom, and under what conditions. Total cost of care is on the minds of many health care stakeholders, and it became clear that additional flexibility was needed to inform formulary committees, not just providers, about medication benefits, risks, and costs.

The National Pharmaceutical Council (NPC) has long been involved in this issue, playing a leadership role in the national conversation about HCEI since 2010, with research that raised awareness of the policy and legal ambiguities associated with case studies.1,2 We’ve held a town hall meeting on the topic for bio- pharmaceutical compa- nies, hosted conferences, and authored a series of articles addressing the issue.3 In addition, we provided testimony, submitted comments, and partnered with the Academy of Managed Care Pharmacy on recommendations to clarify how to exchange HCEI and what infor- mation should be available for payers to help plan and prepare for new product and new indication approvals, among other activities.

In June, the FDA issued final guidance regarding communications about HCEI between biopharmaceutical companies and payers. This new guidance specifies:

  • What information can be shared: Any analysis, including clinical data, inputs, and other information that identifies, measures, or describes the economic consequences for the use of a drug or medical device can be shared. Information may be presented in a variety of ways, including dossiers, slides, or other information.
  • With whom: Information can be shared with a variety of public- and private- sector payers, formulary committees, and technology assessment panels, as long as they are multidisciplinary audiences and review scientific advice to make selection, acquisition, formulary management, or coverage decisions. This includes people who may have multiple professional responsibilities.
  • Under what circumstances: The claim must be related to an approved indication. Recognition is made that these “may vary in certain respects from... FDA-approved labeling.” Guidance is provided to identify when this variation is considered to be related and what information would not be supported. This information is considered pro- motional and must be submitted to the FDA at the time of use.
  • Based on what standard: The information must be based on “competent and reliable scientific evidence” (CARSE), a standard followed by the Federal Trade Commission, which is different from the FDA’s “substantial evidence” standard.1 CARSE is defined as evidence developed using generally accepted scientific standards that yield accurate and reliable results.
  • Which products: This includes biopharmaceuticals and was expanded to include medical devices. When information exchange is permitted: In addition to marketed products and indications, the FDA provided a path for the exchange of preapproval information for both new products and new indications, to enable payers to make informed coverage and reimbursement decisions based on the product information, factual presentation of results from a study, patient utilization projections, anticipated time line for FDA action, and other information.
  • Safe Harbors: The FDA notes that HCEI included, or used to inform, risk-sharing and value-based contracts are not in the guidance.

Having more information to better inform decisions benefits everyone. A study the NPC conducted with Xcenda found that payers want multiple types of information and that their current decision making is limited by the available data. Payers believe the benefits of broader communication outweigh the potential harms and that better information can improve patient outcomes and potentially lower costs.4

Although having better access to HCEI can enable broader conversations in which value-based contract terms are discussed, other barriers remain. As recent NPC research demonstrates, these other regulatory barriers make it challenging to advance value-based contracts.5 One of these challenges, the need for an antikickback safe harbor for value-based contracts, may soon be addressed. In August, the Department of Health and Human Services’ Office of Inspector General issued a request for information on how to address the regulatory provisions that may act as barriers to value-based care. Improving the information that can be shared as the FDA outlines in its guidance is the first step. Other changes are needed to make forward progress in contracting efforts.

In coming years, as more complex treatments and medical innovations are developed, the ways in which we organize, deliver, and pay for health care will only increase. The FDA guidance on communication between manufacturers and population health decision-makers and payers is the first step needed to pave the way for more value-based contracts, more efficient coverage determinations, robust health care decision-making, and, ultimately, better and more appropriate care for patients.


1. Garrison LP, Neumann, PJ, Radensky P, Walcoff SD. A flexible approach to evidentiary standards for comparative effectiveness research. Health Aff (Millwood). 2010;29(10):1812-1817. doi: 10.1377/hlthaff.2010.0692.

2. Neumann PJ, Saret CJ. When does FDAMA Section114 apply? Ten case studies. Value Health. 2015;18(5):682-689. doi: 10.1016/j.jval.2015.02.013.

3. Perfetto EM, Bailey JE, Gans-Brangs KR, Romano SJ, Rosenthal NR, Willke RJ. Communication about results of comparative effectiveness studies: a pharmaceutical industry view. Health Aff (Millwood). 2012;31(10):2213-2219. doi: 10.1377/hlthaff.2012.0745.

4. Xcenda/AmerisourceBergen and the NPC. Information wanted: finding the balance in pharmaceutical evidence exchange with payers and providers. NPC website. Published August 2017.

5. NPC. Regulatory barriers impair alignment of biopharmaceutical price and value. NPC website.

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