Pharmaceuticals and Value-Based Care: Not the Best Fit?

This Forbes article shows that there is more than one way to think about value-based care when it comes to pharmacy benefits. A pay-for-value arrangement is one is that reimburses for medical care based on outcomes rather than number of services provided. The belief is that value-based payment models will result in better outcomes and lower cost. Under a pay-for-value approach, the provider is paid more, in the form of a bonus, when outcomes are good and certain metrics are met, and paid less when performance does not meet specified criteria.

While VBC is showing positive results on the medical side, it’s less clear that this approach makes sense for prescription drugs. There’s reason to be concerned that pharmaceutical companies will simply make even more money and overall cost will not come down. It is very expensive for the drug makers to conduct the studies to support the efficacy of their new product. In some instances the new drug fails in the clinical trial, at a substantial cost to the manufacturer. That’s the main reason they give for why the drugs that do make it to the market cost so much – in essence, the reward for a high-value drug is baked into the price.

Even so, there is a range of value in the drugs that are on the market. Employers, who ultimately are the ones paying the bill, are very focused on the explosion of high-cost specialty drugs and the expected impact these new drugs will have on healthcare costs overall. Greater transparency into the “value” of a drug – the benefit that the patient can expect – may be the best way to ensure that the most effective drugs are the ones used most often. However, in the end, it will be up to the insurance companies and PBMs to factor this information into decisions about drug formularies and for providers and patients to factor into decisions about treatment plans. Who knew health care could be so complicated?

Tracy Watts
by Tracy Watts

Senior Partner, National Leader for U.S. Health Policy

Register for Mercer US Health News to receive weekly e-mail updates.