In a typical value-based contract, the manufacturer and payer take risks; If the drug does not work as intended, the manufacturer is likely to reimburse the payer for some or all of the costs. The payer, on the other hand, incurs upfront costs by covering an expensive agent, whether it works or not. With the continued growth of specialty pharmaceuticals, as evidenced by U.S. Food and Drug Administration (FDA) drug approvals in 20187, value-based contracts are moving towards a more experimental form of contracting for orphan drug indications. Over the past decade, the U.S. healthcare system has embarked on a serious transformation, with many stakeholders trying to tie payments to value rather than volume. That`s why we`re seeing an increase in value-based contracts, and while there are still serious barriers to widespread adoption, it`s likely we`ll see more value-based contracts in the future. But what is value-based contracting? Learn everything you need to know about value-based contract templates with our definitive guide. In addition, value-based contracting can help generate concrete evidence of a drug`s effectiveness, which could lead to better healthcare outcomes in the future. In the real world, there are many issues and challenges in negotiating, implementing, and pursuing value-based agreements. Data for actual outcomes can be difficult to obtain, and even when results are tracked, it is difficult to account for other factors that affect treatment effectiveness and patient outcomes.

In addition, payers often focus less on the specific outcomes of treatment than on reducing overall medical costs over time. For most, if not all, payers, another barrier to VBA may be systems that support reimbursement – which are based on the implicit model you pay for therapy on day one and are complemented by that transaction. All relevant systems – from authorization and reimbursement to payment and security – are designed to support one-time payments. So you can imagine the billing issues that arise when a payer only reimburses half the price of the therapy on the first day and then makes additional payments, such as quarterly milestones to align with the measured results. Internally, before sitting down with the payer to negotiate, manufacturers need to spend much more time evaluating the therapeutic benefit and modeling the risk they take with different types of value-based models. Will we do better (for ourselves, for patients, for payers or providers) if we use a VBA or a traditional reimbursement mechanism? Do the upside potential and value created justify the investment and increased complexity? Similarly, payers need to develop their own value-based models – and determine whether their systems can accommodate therapies that might be priced differently on day 180 and day one. For some time in the United States. Healthcare decision-makers have talked a lot about a transition of the payment system from volume to value.

Results should play a role, not the volume of services provided. Although there has been a noticeable shift from fees for services to value-based payment mechanisms in the reimbursement of doctors and hospitals, it seems that every year a radical shift towards value-based prices and contracts is postponed for some time in the future. .