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Marc O’Connor is chief operating officer for Curant Health.
Curant Health executive discusses key insights from Asembia 2018.
A mad dash to consolidation is sweeping the healthcare industry. It appears that all stakeholders are bulking up and that vertical integration is the new key to long-term viability. Questions about the future direction of Amazon, JPMorgan, Berkshire Hathaway, Walmart, and Humana-along with their millions of collective employees-adds to the frenzy, but may also be the tipping point for meaningful improvement in systemic transparency.
In the midst of the rampant speculation on consolidation plans, we gained two key insights into the current state and future opportunities in outcomes-based contracting (OBC) that have the potential to drive down overall healthcare spending while injecting real value into the system.
Operational implementation of outcomes-based contracts should start with patient engagement and support
Specialty pharmacy industry stakeholders still view outcomes-based contracts as little more than rebate programs. Harvard Pilgrim’s contract with Amgen for its rheumatoid arthritis therapy Enbrel is one recent example supporting this viewpoint. But what’s missing in nearly every outcomes-based contract, including those discussed at Asembia 2018, is a vehicle that can give manufacturers and payers the ability to engage providers and patients at a more meaningful level.
A Value-Based Contracting Lifecycle Framework detailed in one of the conference presentations provided a succinct pathway or methodology for operational execution and implementation of OBCs. The first phase focuses on strategic decisions on product, cost/value analysis, stakeholder selection, and contract design. Importantly, the OBC implementation phase begins with patient engagement and support. The very next step in the pathway involves data collection, integration, analysis, and outcomes measurement. The takeaway? Shrewd manufacturers would do well to engage directly with plan sponsors that have large populations of chronically ill patients. Together, they should determine how they are going to engage and support patients and which data are most critical to acquire and analyze in the reasonable adjudication of next-gen OBCs.
Outside of a hub, manufacturers and their brand teams are often constrained in their ability to impact adoption, compliance, and persistence, though there are ways brand teams can build on awareness to improve adoption, conversion, and overcome barriers to persistence.
We need more carrots, and all we have are sticks
Simply refusing payment when pharmaceutical therapies fail to reach certain patient outcomes is not much of an incentive for manufacturers. It is a big stick, but the industry needs carrots. Insurers should be willing to pay more when a therapy is shown to keep a patient out of the hospital-or some other valuable outcome-instead of simply demanding rebates when a therapy falls short. Novartis announced an agreement in 2017 that states the company will only receive reimbursement for its massively expensive leukemia drug Kymriah if patients respond to the treatment by the end of the first month of treatment. This is the first example we are aware of that puts a manufacturer at full risk in an outcomes-based contract. Payers are always seeking to minimize risk. Manufacturers, from whom we demand life-changing therapies, gain through superior outcomes. The middle ground in those competing interests is where the most fertile ground in outcomes-based contracts has yet to be cultivated.
Plan sponsors will continue to demand these agreements, particularly for new, costly drugs. They should be a great thing for all concerned. These contracts create a direct agreement between payers and manufacturers. With the right supplements, including care management services that improve adherence and generate patient data critical to the fair adjudication of OBCs, we may well be at the tipping point of real healthcare industry alignment.
Marc O’Connor is Chief Operating Officer for Curant Health.