Barriers to value-based drug pricing still abound

SAN FRANCISCO – America's journey into the tricky landscape of value-based health care, pioneered by hospitals and insurers, continues to beckon drugmakers to get onboard. But logistical difficulties and open questions around who benefits from the approach are slowing its march, panelists said during a session on the subject at the BIO International Convention.

"Interest is growing," said Bob Spur, Novartis Pharmaceutical Corp.'s head of patient access and health policy in the U.S. "But the resources, the IT systems, the ability to collect data and assign contracts that go beyond the benefit cycle all have to be incorporated into a value-based or a performance-based contract."

Defining agreeable metrics for measuring value, one of the harder parts of value-based contracting, isn't the only stumbling block. Kaiser Permanente one of the nation's most integrated health care systems, is among the best equipped to track and deliver the kind of outcomes and real-world data needed to fuel adoption of value-based drug pricing. Yet it hasn't tackled a performance-based contract using its data yet, Kaiser executive Jo Carol Hiatt said.

One reason: Secure data sharing between insurers and drug companies remains difficult to implement in a world where hospitals and health data are climbing the ranks among favored hacking targets. Kaiser alone faces thousands of phishing attacks each week, said Hiatt. "That kind of threat makes our folks very nervous about anything that would involve shipping our data out," she said. "Figuring out some forum where we could sit down with Novartis or whomever where we could look at the data together and decide whether or not we met various metrics or not. . . . That's probably going to be one of our bigger hurdles."

WHO REALIZES THE VALUE?

Even if logistical issues are ironed out, open questions about the flow of benefits in pricing schemes accounting for the long haul remain open. In arguing its case for the value of medicines, industry often references the life-long earning power of patients helped by pricey medicines. But, in cases such as hepatitis C where a high cost, short duration treatment yields lasting benefits, "the beneficiary of the therapy, in terms of avoiding liver transplants is actually Medicare," Hiatt pointed out.

"Unless those individuals stay with our plans or some of those other programs, [the insurers] aren't going to see the benefit. It's going to be CMS," she said.

VIABILITY BY CONTEXT

Context can also be a determinant in ability to execute value-based or performance-based contracting. "In the public domain, with Medicare or Medicaid patients, the landscape is much more regulated, of course, and much more difficult for us a pharmaceutical company to engage," said Spur. Because of that, Novartis has primarily engaged with commercial insurance systems as it explores the space, most notably with Aetna Inc. and Cigna Corp. on Entresto (sacubitril/valsartan) for treating heart failure.

The ferocity of fighting over a proposed nationwide Centers for Medicare & Medicaid Services Part B drug reimbursement pilot that would test changes in reimbursement for Part B drugs point to how difficult navigating issues of value can be in the federal insurance sphere. (See BioWorld Today, May 18, 2016.)

John Doyle, managing director for global market access and commercialization at Quintiles, summed up the state of the issue simply after moderating the panel: "It's abundantly clear that it's no one stakeholder or one company that holds the power," he said. "It's coordinated. That's where the care is going."

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