Drugmakers, payers entered 100+ value-based contracts in 4 years

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More than 100 value-based contracts were reached between payers and drug manufacturers between 2014 and 2017, suggesting that these contracts may be more prevalent than expected, according to a recent study published in the American Journal of Managed Care.

For its small-scale study, the researchers surveyed 25 subject matter experts from payer organizations and drugmakers. Qualitative interviews were also used.

Value-based contracts, also known as outcomes-based contracting, typically involve a payer agreeing to pay more for a drug that is effective and less if it is not.

Of the 25 respondents, just one manufacturer and four payers said they had not explored or negotiated value-based contracts.

The study also found that more than 70 percent of the value-based contracts negotiated between 2014 and 2017 were not publicly disclosed.

While value-based contracting is emerging as more common, it takes a lot of effort to negotiate a contract, according to the drugmaker and payer respondents. Respondents reported that early talks translated to a signed contract 33 percent of the time for drugmakers and 60 percent of the time for payers.

"This study reveals that the majority of value-based payment arrangements are not publicly disclosed, which could underestimate their true prevalence and impact. Given the effort required to implement a VBA, future arrangements would likely benefit from a framework or other evaluative tool to help assess VBA pursuit desirability and guide the negotiation and implementation process," the study authors said.

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