PhRMA highlights potential savings of outcomes-based contracts
The Pharmaceutical Research and Manufacturers of America has taken a look at the impact value-based contracts have on patient costs, and found that they deliver savings. The Washington, D.C.-based organization found that in the past two years, patients with HIV, high cholesterol and diabetes whose health plans implemented value-based contracts for their medications had 28% lower out-of-pocket costs, on average, than patients in other plans.
The organization’s report also highlights the potential for outcomes-focused contract to save costs for the broader healthcare system alongside patients. It projects that the United States could reduce healthcare spending by $12 billion a year if it can leverage outcomes-based contracts to cut diabetes spending by 5%. Part and parcel of outcomes-based contracts, PhRMA said, is a bigger financial stake from healthcare companies — which can lead to lower co-pays.
However, the report notes that PhRMA members — both manufacturers and payers — have said that barriers to widespread adoption of these contracts remain. Barriers include uncertainty regarding Food and Drug Administration rules about manufacturer communication, concern over violating the federal anti-kickback statute and worries about how contracts would effect metrics related to cost reporting.
The report notes that though these early results are promising, there’s a lot that has to be accomplished from a public policy standpoint that address PhRMA members’ concerns.
“Results-based or value-based contracts can reduce health care system costs and can make medicines more affordable and accessible for patients,” PhRMA president and CEO Stephen Ubl said. “The health care market is starting to move in this direction, but we need public policy reforms that allow greater flexibility for innovative payment arrangements that lower out-of-pocket costs and enable patients to access the right treatments the first time.”
The organization’s report also highlights the potential for outcomes-focused contract to save costs for the broader healthcare system alongside patients. It projects that the United States could reduce healthcare spending by $12 billion a year if it can leverage outcomes-based contracts to cut diabetes spending by 5%. Part and parcel of outcomes-based contracts, PhRMA said, is a bigger financial stake from healthcare companies — which can lead to lower co-pays.
However, the report notes that PhRMA members — both manufacturers and payers — have said that barriers to widespread adoption of these contracts remain. Barriers include uncertainty regarding Food and Drug Administration rules about manufacturer communication, concern over violating the federal anti-kickback statute and worries about how contracts would effect metrics related to cost reporting.
The report notes that though these early results are promising, there’s a lot that has to be accomplished from a public policy standpoint that address PhRMA members’ concerns.
“Results-based or value-based contracts can reduce health care system costs and can make medicines more affordable and accessible for patients,” PhRMA president and CEO Stephen Ubl said. “The health care market is starting to move in this direction, but we need public policy reforms that allow greater flexibility for innovative payment arrangements that lower out-of-pocket costs and enable patients to access the right treatments the first time.”