Outcomes-Based Pricing Needs Collaboration Among Stakeholders

Key healthcare stakeholders need to collaborate to implement a successful outcomes-based pricing model.

Outcomes-based pricing for prescription drugs may be a sustainable alternative for the current payment model, which has left many patients with sticker shock.

However, getting to that place may present a challenge that would require collaboration between, payers, pharmacy benefit managers (PBMs), and drug manufacturers.

“Our relationship with pharma is more substantial than it's ever been,” said Steve Miller, PhD, chief medical offer at Express Scripts to Medical Marketing and Media. “Everybody wants sustainability in the marketplace, whether through outcomes- or indication-based reimbursement in oncology or something we don't know yet. It doesn't mean we'll always be on the same page, but we're constantly in dialogue and that's a good place to be.”

Although many PBMs have stated they have good relationships with other key players, implementing an outcomes-based pricing model has been stagnant.

To create this model, a consensus has to be reached about an optimal treatment, a method must be developed to encourage patients to use the optimal treatment, and there has to be a way to measure the efficacy of a drug, according to an article by Medical Marketing & Media (MM&M).

Since these 3 key factors have yet to be aligned by the healthcare system, outcomes-based pricing may not be evolving as quickly as it should be.

“What we have, in terms of infrastructure, isn't sophisticated enough,” Susan Garfield, co-author of EY’s recent report A Road Map to Strategic Drug Pricing said in an interview. “You need data systems that can talk to each other. You need tools to help stakeholders come together to share information that documents the impact of different therapies and processes. You need incentives to drive collaboration.”

There is much work to be done to decide how long evaluations should be, what other data is needed, and who will have access to data, according to the report. Practical realities add as much burden to the shift towards value-based reimbursement, as much as philosophical and financial realities, according to the article.

However, innovation has not been lost. There is a system that will be implemented in several European countries that rates products on how innovative they are. Highly rated products will negotiate premiums, while me-too drugs will not be reimbursed.

A similar program will likely not be implemented in the United States, since a 10-year study of outcomes-based pricing faced in the UK faced countless challenges in a small population.

“There was a midstream assessment that said, basically, that the data was too hard to get,” researcher Francoise Simon, PhD, told MM&M. “The UK is the size of Texas. That gives you a sense about how big a project this really is.”

Collaboration between multiple healthcare stakeholders, persistence through challenges, and addressing realities will likely result in the most promising strategy to implement outcomes-based pricing.