With intense pressure on drug prices the pharmaceutical industry is turning to value-based contracts – which link the price of a prescription drug to its clinical or economic performance – to ease the tension. But the use of these new drug pricing models with insurers remains limited, despite an active minority of enthusiastic participants.
Pharmaceutical and life sciences organizations that want to expand the use of value-based payment models will need a higher tolerance for financial risk, regulatory change, and the willingness and flexibility to work in close collaboration with payers, health systems, pharmacy benefits managers and patients.
Despite public enthusiasm from many drugmakers, policymakers, insurers and other stakeholders, HRI’s survey of pharmaceutical executives suggests that value-based contracting remains limited in practice.
Just over one-third of pharmaceutical executives surveyed believe that the potential rewards of a successful value-based contract are commensurate with the risks. However, over two-thirds of executives that have participated in a value-based contract said the contracts were successful.
Regulatory trends and breakthroughs in cloud-based technologies are making it easier to capture the clinical and financial impact of new therapies in the real world setting. The success or failure of a value-based contract may depend on the unique attributes of a new therapy, and the organizational and technical capabilities of the collaborating partners.
Pharmaceutical, biotech, and medical device companies confront a challenging competitive landscape in the New Health Economy. Pricing pressures, scientific breakthroughs, expanding demand for health care access, and emerging digital and analytic capabilities are pushing companies to explore unconventional business models and build value-based customer relationships. PwC's pharmaceuticals and life sciences practice helps pharmaceutical, biotech and medical device clients develop future focused business strategies and to implement the programs and procedures essential to success.
Kelly Barnes
US Health Industries and Global Health Industries Consulting Leader, PwC US
Tel: +1 (214) 754 5172
Email
Karen C. Young
US Pharmaceutical and Life Sciences Leader, PwC US
Tel: +1 (973) 236 5648
Email
Douglas Strang
Global Pharmaceutical and Life Sciences Advisory Leader, PwC US
Tel: +1 (267) 330 3045
Email
Benjamin Isgur
Health Research Institute Leader, PwC US
Tel: +1 (214) 754 5091
Email
