Over the past decade, much of the health care economy has shifted from rewarding quantity (fee-for-service) to instead rewarding quality (outcome- and value-based payments). And yet, pharmaceutical manufacturers and pharmacy benefits lag in this transition. Drugmakers continue to be compensated based on the volume they sell and not whether their products are making people healthier.
This is unfortunate for 2 reasons: The costs of medications continue to rise fast- er than other health care services, which make the need for greater accountability more important, and the current system protects the interests of pharmaceutical companies, pharmacy benefit managers (PBMs), and some pharmacies, often at the expense of consumers.
Consider that companies in the drug supply chain financially benefit from overprescribing, overutilization, and waste. Moving to an outcomes-based approach to pharmacy could address these and several other challenges in the US health care system.
A New Standard
Unlike traditional drug pricing, outcomes-based contracts hold the manufacturer accountable for its product by linking its revenue to whether or not the medication delivers on its intended outcomes.
Here’s how it works: A PBM negotiates a price and measurable outcomes with the drug manufacturer on behalf of a health plan. If the treatment delivers the intended outcomes, the plan will pay the agreed-upon price. But if a patient does not respond as expected, experiences adverse effects, or is unable to complete a course of treatment requiring a change to a follow-on medication, the drugmaker will issue a rebate for part, or all, of the cost.
If this sounds familiar, it should. This type of money-back guarantee is common throughout the US economy. Extending this guarantee to instances in which the products in question have life-altering implications for the people who use them is long overdue.
The Future of Health Care
Outcomes-based contracts can facilitate a great leap forward in prescription benefits for several reasons, including:
1. The Potential for More Reasonable Pricing
By directing dollars toward the drugs that deliver as promised, outcomes-based contracts have the potential to reshape how medications are used, which makes drug spend more efficient and rational.
2. Broader Formularies
To combat rising drug costs, payers are adopting more restrictive formularies. Prescribers and members often see this as having fewer choices. But outcomes-based agreements could allow drugs to remain on formularies in exchange for outcome guarantees. In some cases, this can also result in increased access and coverage of medications for patients.
3. Increased Information Sharing