Payer and Pharmaceutical Manufacturer Considerations for Outcomes-Based Agreements in the United States

Abstract

Background: Considerable interest exists among health care payers and pharmaceutical manufacturers in designing outcomes-based agreements (OBAs) for medications for which evidence on real-world effectiveness is limited at product launch.

Objectives: To build hypothetical OBA models in which both payer and manufacturer can benefit.

Methods: Models were developed for a hypothetical hypercholesterolemia OBA, in which the OBA was assumed to increase market access for a newly marketed medication. Fixed inputs were drug and outcome event costs from the literature over a 1-year OBA period. Model estimates were developed using a range of inputs for medication effectiveness, medical cost offsets, and the treated population size. Positive or negative feedback to the manufacturer was incorporated on the basis of expectations of drug performance through changes in the reimbursement level. Model simulations demonstrated that parameters had the greatest impact on payer cost and manufacturer reimbursement.

Results: Models suggested that changes in the size of the population treated and drug effectiveness had the largest influence on reimbursement and costs. Despite sharing risk for potential product underperformance, manufacturer reimbursement increased relative to having no OBA, if the OBA improved market access for the new product. Although reduction in medical costs did not fully offset the cost of the medication, the payer could still save on net costs per patient relative to having no OBA by tying reimbursement to drug effectiveness.

Conclusions: Pharmaceutical manufacturers and health care payers have demonstrated interest in OBAs, and under a certain set of assumptions both may benefit.

Keywords: managed care; outcomes-based agreements; pay for performance; reimbursement.