Few therapeutic areas dominate value-based contracts in pharma

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Ben Comer Senior Manager, Health Research Institute, PwC US September 18, 2018

A survey conducted by PwC’s Health Research Institute (HRI) of 101 pharmaceutical executives found that value-based contracts span more than 15 therapeutic areas, although most of the contracts are concentrated in high cost, increasingly competitive therapeutic areas.

Most pharmaceutical company executives say their companies have not participated in a value-based contract
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HRI impact analysis

For pharma: Design high performance value-based contracts. Some insurers believe that pharmaceutical companies pushing value-based contracts are simply looking for ways to skirt drug utilization management tools, such as formulary exclusions and prior authorization, or sidestep traditional rebate and discount negotiations. Contracts that include meaningful risks, such as money-back guarantees tied to health outcomes or tangible savings desired by an insurance company, health system or PBM, can build trust between partners. Insurers are not likely to offer a premium price for a product based on an additional outcome they believe is a foregone conclusion, especially if they can choose a competing product with a proven track record and predictable cost structure.

For insurers: Bring specific needs to the negotiating table. Making determinations about which outcomes and assessment metrics are needed most for a particular drug class or patient population before engaging with drugmakers may improve the financial, clinical or quality upside in a valuebased contract. Communicating covered members’ specific needs, or the desired financial savings associated with a drug, may improve both partners’ likelihood of success. Unique patient populations covered by specific insurers or health systems may help incentivize drugmaker participation. 

 

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Ben Comer

Ben Comer

Senior Manager, Health Research Institute, PwC US

Benjamin Isgur

Benjamin Isgur

Health Research Institute Leader, PwC US

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