Outcomes-Based Contracting Gain Steam

Amgen’s recent offer to refund to health plans the cost of its statin add-on therapy Repatha for eligible patients who take it and then suffer a heart attack or stroke highlights the extent pharmaceutical companies are willing to go to overcome insurance access barriers to expensive, groundbreaking therapies.

The refund offer was announced along with the company’s March 17 release of FOURIER trial results showing that Repatha reduced risk of heart attack and stroke compared to a statin alone, as well as demonstrating a 15 percent reduction in a composite endpoint that included hospitalization for unstable angina.

At $14,000 a year, Amgen’s lipid-lowering therapy has struggled, along with competitor therapy Praluent, to gain significant market share, as these high-cost PCKS9 inhibitors are commonly reserved for higher-risk patients whose cholesterol is not adequately controlled on less-expensive generic statins. Amgen announced two days after its FOURIER trial results that nearly 80 percent of Repatha prescription claims were initially rejected by insurers.

Amgen had anticipated the need for intervention a year earlier when the company, along with Praluent’s manufacturer, Sanofi/Regeneron, entered outcomes-based contracts with Cigna that modify the cost of the two drugs based on how well customers respond to them.

OBCs are becoming an increasingly common way for pharmaceutical companies to address market-access barriers. Just in February, Amgen announced a contract with Massachusetts-based Harvard Pilgrim Health Care to tie the health plan’s payment for its rheumatoid arthritis drug Enbrel, which faces competition from a biosimilar, to its effectiveness in eligible patients who receive it.
We can expect more of these outcomes studies from pharmaceutical manufacturers to set the stage for testing their projects’ efficacy and cost-effectiveness in the real-world patient setting, with the goal of increasing access in the insured population.

Decision Resources Group’s survey of pharmacy and medical directors from 40 managed care organizations throughout the United States in late 2016 showed that more than one-third of respondents were involved in OBCs, while another third indicated they expected to enter into such contracts in a year.

Our survey suggests that MCOs are not waiting for pharmaceutical companies to make the move; they are initiating these innovative contracts, mostly to save costs but also to improve outcomes. Cardiology is one of the areas commonly targeted for such contracting, the study showed.

The survey—which also included 100 cardiologists—focused on chronic heart failure, partly because of the OBC Novartis announced with Cigna and Aetna for Entresto in early 2016. The drug company’s clinical trials showed that Entresto significantly reduced mortality and hospitalizations in heart failure patients with reduced ejection fraction compared with a standard-of-care ACE inhibitor. The contracts put these metrics to the test in the insurers’ real-world populations. If the drug fails to live up to expectations, insurers get a discount on the drug.

Our survey set out to gain high-level insight into how OBCs are structured, since confidentiality surrounding OBCs results in limited publicly released details.

To track drug performance under OBCs, MCO directors indicated that they mostly rely on patient-level pharmacy claims data, but also medical claims data, which physicians may be asked to report.

Sixty percent of surveyed directors reported that rebate credits are given to drug companies that meet contract requirements. Slightly more, 67 percent, said they reward contractors who meet the prescribed metrics by moving their drugs to a more favorable position on the formulary. On the flip side, a drug company that fails to deliver on the contract metrics can expect to lower the drug cost to the payer; in some cases, the MCO would move the drug to a less-favorable position on the formulary.

Although pharmaceutical companies are exposed to risk, they may also benefit in the short run from assurances that patients will have access to the drug for the duration of the contract (typically two years, according to our respondents) while it is being tested. Of note, 60 percent of surveyed MCOs reporting involvement in OBCs said the drugs subject to OBCs are in a preferred position or low-copay tier on the formulary. In addition, 53 percent said some or all utilization management restrictions are eased. The ease of access to the drug, likely the result of relaxed prior authorization rules, was one of the most important benefits of OBCs cited by the cardiologists we surveyed that participated in such contracts.

Although only 21 of the 100 cardiologists surveyed participated in OBCs, most of all those surveyed embraced the notion of value-based contracting and expressed a willingness to be a partner to such contracts. Most surveyed cardiologists indicated they would be more willing to prescribe drugs that are demonstrated as clinically superior or cost-effective.

Many of our surveyed MCO directors say pharmaceutical companies can further the conversation on outcomes-based contracting by bringing adequate data to the table, suggesting that studies against comparators are useful. Yet these directors also say the biggest challenge is collecting necessary data and trusting and verifying the integrity of data supplied by the pharmaceutical industry. Another common problem is dedicating resources to the contracting process.

The challenges with OBCs have been widely reported, ranging from affecting Medicaid best-price guarantees to anti-kickback rules to FDA regulations limiting the information manufacturers can share with payers. But with the Trump administration demanding lower drug pricing while also signaling receptivity to tackle regulations hampering innovative contracting, the stars are aligning for OBCs to take off. For now, it appears that major companies are ramping up these deals to protect their major investments, and others who do not follow suit may be left in the dust.


To learn more about innovative contracting, visit our recent report, found here (https://decisionresourcesgroup.com/get-the-report/232015-biopharma-heart-failure-access-reimbursement-access/).