Value-Based Pharmaceutical Contracts: Value for Whom?

• Published in: Value in health 2020-02, Vol.23 (2), p.154-156
• Main Authors: Kannarkat, Joseph T., Good, Chester B., Parekh, Natasha
• Format: Article
• Language: English
• Subjects: Clinical outcomes; Contracts; Cost control; Cost reduction; drug pricing; Health care; Health care expenditures; Incentives; Patient-centered care; pharmaceutical contracts; Pharmaceutical industry; Reimbursement; Value; value-based contracts
• ISSN: 1098-3015; 1524-4733
• DOI: 10.1016/j.jval.2019.10.009

Value-based pharmaceutical contracts (VBPCs) are performance-based reimbursement agreements between healthcare payers and pharmaceutical manufacturers in which the price, amount, or nature of reimbursement is tied to value-based outcomes. VBPCs are often complex, and the nature of who benefits and in what ways can be unclear. We discuss how VBPCs compare with value-based payer–provider arrangements in terms of performance-based reimbursements and alignment of incentives. In addition, we examine how VBPCs can affect costs, clinical outcomes, and access to medications. Because these contracts are unlikely to reduce costs in isolation, we recommend taking a patient-centered approach when developing VBPCs and tying VBPCs to more overarching payer drug cost reduction strategies. •The nature of who benefits from value-based pharmaceutical contracts (VBPCs) is unclear.•VBPCs are reimbursement agreements between healthcare payers and pharmaceutical manufacturers that tie price, amount, or nature of drug reimbursements to value-based outcomes.•We discuss how VBPCs compare with value-based payer–provider arrangements in terms of performance-based reimbursements and alignment of incentives.•We examine how VBPCs can affect costs, clinical outcomes, and access to medications.•We recommend a patient-outcome centered approach for developing VBPCs and tying VBPCs to overarching drug cost reduction strategies.