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What’s Your Value Based Contracting Knowledge Level?

We’ve written numerous times about value-based contracting (VBC)….. including earlier this week. When it emerged a few years ago there was much hope that VBC would offer some remedy to the acceptance of ultra-high cost therapies that have been the predominant source of new specialty FDA approvals for the last few years. However, relatively few VBCs have been implemented due to their complexity. 

Value methodologies have begun to morph. In fact, the term ‘value-based contracting’ is now a bit too high level. Are you familiar with the nuanced differences between value-based pricing (VBP), value-based insurance design (VBID), long-term financing (LTF), and outcomes-based contracts (OBCs)? If not, the time may be neigh to get up to speed.

We ran across an abstract (below) that does a very nice job of taking our understanding of VBC to the next level. It summarizes the views of 22 health plans with multiple lines of business collectively covering more than 34 million beneficiaries. These plans are large enough to have dipped their toes into the VBC pond and/or thought long on the inherent challenges.

The initiative identified four business objectives including access to new therapies, their rising costs, spending variability across the patient spectrum, and the incidence of reduced levels of clinical evidence. Additionally, the initiative selected five operational strategies including developing new UM controls, the need for increased patient engagement, including providers in the risk sharing methodologies, expansion of data analytics unique to each contract, and the need to staff more pharmacists, statisticians, and data scientists to be experts in the unique aspects of managing each contract.

The contracting world is less and less satisfied with rebates and is looking for something else to fuel the specialty pharmacy engine. VBC is a no brainer IF design and implementation can be refined. So, if you want to keep abreast of that trend, consider the lessons offered. 


Value-Based Management of Specialty Drugs:

Practical Considerations and Implications for Pharmacy

May 13, 2021 — Policy makers and health plans seek value-based management of specialty drugs. This study examines real-world factors that favor some approaches over others and their potential impact.


Objectives: Concerns about high and rising drug prices have prompted a call to manage prescription drugs according to their value. Although not all proposals referred to as “value based” are well suited to advance this mission, health plans must select among them under the influence of competing demands and constraints of their market and nonmarket environments. To understand the implications for health policy, we sought to explore how health plans might select among and implement these approaches for specialty pharmacy (SP) under the incentives and barriers that these conditions create.

CLICK HERE to access the full abstract.


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