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Pharma: Meet Your New Neighbors

Pharmaceutical ExecutivePharmaceutical Executive-03-01-2018
Volume 38
Issue 3

Executives from diagnostics, payer, pharma, and patient care companies converge to share the inside scoop on outcomes-based contracting.

Executives from diagnostics, payer, pharma, and patient care companies recently got together to share stakeholder insights on outcomes-based contracting


The title of a recent panel, held at the CBI Outcomes-Based Contracting conference in Philadelphia late last year, was “Create a Win-Win Scenario-Linking Contracts to Cost-Savings Evidence and Better Patient Outcomes.” During the panel, and in additional interviews, the speakers shared their insights and thoughts

(L-R) Marc O'Connor, of Curant Health; Jerry Conway, of CDx Diagnostics; and Harry Vargo, of Aetna, pose after taking part in a recent panel at the CBI Outcomes-Based Contracting conference in Philadelphia. Not pictured, but part of the panel discussion, was Sachin Kamal-Bahl, of Pfizer. Photo/John Halpern.

on the new world of outcomes-based contracting. Jerry Conway, executive VP of managed care at CDx Diagnostics, and formerly VP of payer relations and reimbursement at Foundation Medicine Inc., served as moderator. Harry Vargo, director, trade relations, for Aetna; Sachin Kamal-Bahl, vice president and head, Center for Health Systems Innovation and Leadership, Pfizer; and Marc O’Connor, principal and chief operating officer for Curant Health, a provider of personalized care management and medication management services, participated in the panel discussion.

The following are some insights from the industry neighbors, and key stakeholders in the value-based care equation, on navigating this new terrain. 


#1: Dialogue, not dictate: The payer perspective

VARGO: We are trying to change the way we currently partner with pharma. We are looking at a better approach to healthcare-one that provides a better impact for our patients with the best possible outcome for their medications and their overall healthcare. 

We are being flexible, we are willing to change. This is different than what we’ve ever done before. Previously, pharma manufacturers and healthcare was transactional. “We have your drug, we cover your drug, we pay for your drug.” Outcomes contracting is changing that. I like to say when we start talking with manufacturers in these outcomes-based discussions, “We are not trying to prove your drug does not work.” We are not trying to prove that. We are just trying to get the best possible outcome for our members and patients. 

One thing to keep in mind, there is not a wrong answer, there’s not a wrong metric. It’s really what you are looking for and the pharma manufacturer. It can be different from one pharma and one health plan. What might be good for Aetna, might not be good for someone else. And what might be good for Pfizer, might not be good for Merck or Lilly. 

[It’s important to] start to have that dialogue. It may not be the perfect contract in the beginning. But as that dialogue continues and that trust builds, you are going to bridge to something better and better.

The dialogue will bring up obstacles and then you can talk through them. We’ve grown substantially in the last two-and-a-half years. And what the manufacturer ultimately brings to us as a value proposition for the product may not be what the health plan is looking for, not what Aetna is looking for, but in that dialogue, you will find something that you can agree on. So, to me, in that dialogue is the key. 

#2: A triple win?

KAMAL-BAHL: Think of it as a funnel, with the patient at the large end. And that the first question one should ask is-does it make sense for the patient? The next question should be whether or not it is good for 

the system at large. The third question should be how do we create a win/win for other stakeholders? This is a proposed structural and logical way to think of the question at hand. It should start though with the question of whether or not it makes sense for the patient.

#3: Who is best-placed to achieve better outcomes?

O’CONNOR: This may sound like an infomercial for my company, Curant Health, or my industry, but we have a more meaningful way to engage with patients and providers than what a PBM (pharmacy benefit manager), a hub, a specialty pharmacy, or a population health organization can do. Additionally, we can assume risk as part of an outcomes-based contract, along with the manufacturer. Medication management services companies do two things that are very challenging for manufacturers or payers to do. The first is we have those discussions with providers that go outside of the awareness phase. Outside of “here’s the label, here’s the drug, here’s what it does.” We provide additional line of sight in the adoption, compliance, and persistence phases, when it’s challenging for manufacturers for a variety of reasons, to have those discussions with providers. And then the payers are always challenged in how they engage the provider and the patient. They do engage some patients via support resources, but deep patient support is challenging for them because it’s not part of the payers’ core focus.

Number two-and most importantly-is having an entity that will help determine and deliver improved health outcomes in a way that is meaningful for all stakeholders. When patients are engaged, adherent to their therapy and experiencing improved outcomes, not only do you see improvement in contract metrics between the payer and the manufacturer, but other metrics improve as well. Adoption and compliance numbers go up for the manufacturer. They have a deeper connectivity with the patient. It’s all about rebate minimization and it provides a way to have a better relationship with the patient without the manufacturer’s legal department having concerns. Most importantly, patient outcomes improve for that disease state.

We are focused on improving the outcomes of the patients-it’s a care model to engage the patient and the provider. Outcomes are value that we can sell and that we go at risk on. Our model is based on the alignment of all the healthcare stakeholders. That changes everything.

VARGO: Aetna has an integrated platform; we have both medical and pharmacy, so it’s a little bit easier for us because we have both. But with some that have the medical and some that have the pharmacy, it could be a little more difficult because that seamless approach or real-time data isn’t going to be there to help point to outcomes. 

#4: Diagnostics and genomics as a pragmatic solution

CONWAY: Validated comprehensive genomic profiling (CGP) has emerged in recent years as a pragmatic solution that is central to successful outcomes-based contracting in oncology.

In oncology, the top three most pressing challenges faced by payers are:

  • Control of rising cancer specialty drug costs.

  • Control of overall cancer care costs.

  • Balancing treatment standardization with personalization.

Payers are responding to these challenges by implementing a number of alternative payment models, or APMs (e.g, clinical pathways, medical home, and bundled payments), that are designed to shift from a “pay for volume” to a “pay for value” or “real-world outcomes-based” paradigm. 

Precision oncology, or the clinically and financially efficient use of genomically matched, targeted, and immunotherapy treatments and clinical trials, is evolving as a potentially important starting point for cancer care within successful APMs.

CGP drives successful utilization and cost-management strategies to effectively address the top three challenges identified by payers in oncology, and, therefore, should justify the necessity of payer coverage and value-based payment today when used in the appropriate clinical setting.



#5: See the physician, not the prescriber 

VARGO: Regarding the physician, none of these value-based contracts should have any influence on what they are prescribing. I don’t think that’s the idea. We have formularies, we have everything around tiering and status and precertification. I will tell you that value-based contracting should not be any type of an impediment for a physician. The idea of value-based contracting is about making sure that we are seeing agreed-upon, meaningful results for our patients. 

We haven’t had any need to gather extra data or information from the physician or prescriber about their patient and outcomes. If there came a time when we did, we would go to the manufacturer and talk through it. Certainly, we don’t want to put undue onus on physicians or even on our patients. 

We have had situations where we didn’t meet the targets. For example, it may have been a specific lab value. There have been outcomes where not 100% of lab values have been there, but it was enough that we knew we were getting the result that we wanted. That wasn’t a deal breaker because the data was there.

#6: Think long-term, meaningful outcomes

VARGO: If your intention is to do a value-based contract, you have to look at this as multi-year. You are going to put a lot of effort and a lot of discussion into this. Our intention when we start going down these roads is to look at it as a multiple-year [relationship]. And you almost have to. If you go shorter than that, you are not going to get that real, true value of that partnership.

Some drugs have price tags of 400, 500, $600,000 and that’s somewhat hard for us to swallow on the pharmacy side; but that is our job as a payer-to pay for product. But that shouldn’t be the ultimate reason

why we don’t pay for a product. We evaluate medicines as they come. We evaluate these contracts on a daily basis, and I’m not exaggerating, we have been fortunate that we have a lot of manufacturers that want to work with us; we have a lot of discussions. And we work internally with our team. We have a health economics person that looks at the contracts and we take them to our clinical team and medical directors to make sure there is meaningfulness in that outcome. That is really the key. That there is meaningfulness to the outcome and value to our members-and, in this day and age, simple to administer. If the administration of these is very in-depth, that can be very difficult.

#7: How do you best provide contracting clarity? 

KAMAL-BAHL: All of this hinges on agreement on what it is we are measuring, who measures it, when, who pays for those measurements to be done, who manages the measurement process, and what happens when there is a disagreement on those measurements. The enabling factors underlying this are pretty basic-it’s trust and the willingness and desire to further the movement from volume to value. 

Maybe there is no disagreement amongst stakeholders on this point, but we can do a better job on providing clarity that can help further the dialogue.

#8: More on data

O’CONNOR: Healthcare stakeholder incentives are going to start aligning. This is the first foray into outcome-based medicine practice. That connectivity with the data must happen, and not just the quantity of the data…big data is okay, but unless you are taking the individual data elements to act on to improve the

Marc O'Connor, principal and chief operating officer for Curant Health, comments during the panel discussion at the CBI Outcomes-Based Contracting conference. Photo/John Halpern.

outcome for the patient, the data isn’t meaningful. You need to find the data that is important for the particular drug in question, and its target population, to gauge how it’s affecting each stakeholder. To start, though, we must get our heads around what’s really needed from big data. Only then will we be able to build on the incentives. 

What manufacturers need to do-or have access to-is the collection of granular outcomes data at the patient level. Manufacturers have a lot of data on physicians and their professional and personal details, but the need for data is going to shift to data that’s about the patient.

#9: Unintended consequences

O’CONNOR: It is too soon to tell for sure, but my gut tells me this is very disruptive. There are going to be a lot of impacts on the way complex patients are managed and this is going to step on the toes of a lot of companies and their stakeholders. Again, it may not align with their incentives. So, I don’t know what that looks like, but there is no question there are going to be some bumps in the road. We just don’t know what they are yet.

VARGO: There’s always the opportunity for downsides or risk. But if you focus that it is about the health and outcomes for our patients, and treat our patients to make sure they are getting the best outcomes, medication, etc., then that is the goal. 

KAMAL-BAHL: The move from volume to value is real. The risk of not trying to move the system in this direction is larger than any risk of experimenting and innovating in this space. We have to give this a real shot and we have to be smart about how we go about creating this shift. The adjustments in the short-term will have a positive impact in the long-term. 

CONWAY: This isn’t an unintended consequence, but another area to think about. CGP also has the potential to provide biopharma-sponsored clinical trial alternatives to patients when covered drugs are not an option (i.e., not paid for by payers), as well as accurately identifying clinically relevant mechanisms of resistance or even a complete lack of genomically matched treatment options to help eliminate futile or potentially harmful treatment (cost avoidance).


Lisa Henderson is Editor-in-Chief of Pharm Exec. She can be reached at lisa.henderson@ubm.com. Follow Lisa on Twitter: @trialsonline

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