Outcomes-Based Contracting Use Among Payers

Outcomes-based contracting (OBC) is gaining traction as a tactic to reduce high drug costs, according to a recent study presented at AMCP Nexus 2018. By supporting new therapies, the successful results of OBC offers a resolution to manufacturers and payers. With measurable endpoints, manufacturers can present usable information to payers, which directly ties into financial liability. 

To better understand how payers interact and negotiate through OBC, a research team led by Nathanael White and colleagues sought to understand the level of familiarity and use of OBC among payer segments, understand key payer objectives in negotiation of OBC, determine OBC failure reasons and timing, and identify OBC models with high likelihood of success. The research team identified 422 formulary decision makers from US payer segments and invited them to participate in a 14-question web-based survey. For inclusion in the study, the identified payers all needed to be involved in making drug coverage decisions witin the past 2 years. 

The researchers identified a total of 22 respondents that met inclusion criteria for the web survey, which represented 121.2 million covered patients. According to the findings, the survey’s results demonstrated a little over half of the respondents utilizing an OBC within 5 years (55%). The researchers noted that the most effective disease states for OBC included cardiovascular disease (37%), oncology (18%), and immunology/inflammation (18%). Further, out of 4 potential OBC models, 45% noted that clinical performance models had the best potential for success. A realization by about half of the correspondents (45%) was that manufacturers take on a significant financial risk. Additionally, 27% said they expect manufacturers to take on a moderate degree of financial risk. 

The survey respondents also identified high implementation cost as the most common reason for OBC implementation/negotiation failure. Further, the most common stage for OBC failure, out of 6 steps, was the first step—identification of shared interests and initial discussion of needs, priorities, and feasibility. 

“Manufacturers should plan OBC-friendly clinical programs with measurable endpoints in the real world to mitigate higher degrees of financial risk expected by payers,” the study authors concluded. “Both manufacturers and payers should develop strategies to better overcome early-stage OBC failure rates and find cost-effective methods to collect and analyze data.”

—Taylor Robbins