1. Value- Based Contracts
James T. Kenney, RPh, MBA
Manager, Specialty and Pharmacy Contracts
Harvard Pilgrim Health Care
President-Elect
Academy of Managed Care Pharmacy

2. Contract Options

3. Traditional Contracts
Rebate or Purchase Discounts
Access Driven
Market Share Components
National
Regional
Plan Level
Manufacturer’s Primary Objectives
Gain Preferred Tier Status
Avoid Restrictions

4. Value-Based Contracts
A value-based contract is a written contractual agreement in which the payment terms for medication(s) or other health care technologies is tied to agreed-upon clinical circumstances, patient outcomes, or measures.*
*AMCP Value Based Partnership Forum June 2017

5. Other Contract Types Indication-based contracts
Outcomes-based Contracts
Rebates Paid Based on the Actual Performance of the Drug in Real World Clinical Practice
Performance-based Contracts
Improved or Guaranteed Medical Outcomes as an Offset to the Increased Cost/Use of Pharmaceutical Products
Comparative Effectiveness Contracts
Compare Different Treatment Options for a Specific Medical Condition
Indication-based contracts
Outcomes Focused on Specific Measures Related to an Indication

6. Core Elements

7. Value Proposition
Improved Medical Outcomes Will Reduce Costs and Offset the Increased Use of Pharmaceutical Products (Aligns with Pay-for-Performance and Risk-Sharing Strategies with Providers)

8. Outline Potential Options
Design Model
Outline Potential Options
Data Extract
Measure Baseline
Test Hypothesis
Develop Contract

9. Outcomes Contracting Starting Point is a Blank Slate
Can be Complicated or Simple
Need to have Buy-In from Corporate Management of Both Parties
Typically Need Pharmacy and Medical Claims Data
Can Start with Basic Pharmacy Claims Only Agreement
Rebates Shared with Risk Holders

10. Outcomes Contract Basics
Chronic or Acute Medical Conditions
Identifiable and Measurable Outcomes or a Valid Proxy
Population or Individual Based
Upside or Downside Risk
Adherence/Compliance Requirements

11. Key Drivers for Manufacturers
Improved Product Access
Market Share Growth
Reduce Resistance to New to Market Agents
Develop Concepts Pre-launch
Include Outcomes in Clinical Trial Design
Restrictive Plan Designs/Formularies
Gain a Competitive Advantage

12. Key Drivers for Health Plans
Proof of Efficacy with Outcomes Performance
Improved Product Access
Limit Products to a Specific Population
Reduce Financial Risk
Insurance for Poor Real World Experience
Increase Rebates/Savings
Reduce Overall Costs

13. Measurement Challenges
Metrics
Timeline
Data Collection Method
Validation Options/Analytics
Third Party Participation
Health Insurance Portability and Accountability Act (HIPAA)

14. Barriers to Success Information Technology Limitations
Selection of the Outcomes Measure
Insufficient Patients on Drug
Transaction/Administrative Costs
Lack of Adherence
Legislative and Regulatory Issues

15. Legislative Issues Federal Anti-Kick Back Laws Medicaid Best Price
Relief Needed to Encourage More Companies to Participate
Medicaid Best Price
Issues with Amount of Outcomes Dollars at Risk
Off Label Promotion
PIE Legislation Could Remove This Barrier
Must Have Outcome Based on Actual Clinical Data in the Label

16. Federal Anti-Kickback Statute
Prohibits the Exchange of Anything of Value to Induce or Reward Referrals of Federal Health Care Program Business
Safe Harbored Activities
Defined in the Statute
Office of the Inspector General (OIG) Implements Regulations
Value-based Contracts not defined by Congress or Health and Human Services
Needs to Allow the Exchange of Economic Information

17. Medicaid Best Price
Mandatory Rebate of 23.1% Off of the Average Manufacturer’s Price (AMP)
Paid to Fee for Service and Managed Medicaid Programs
Value-based Payments Could Exceed Best Price
Nominal Price Exemption
Individual vs. Population Based Payments
Money-Back Guarantees
Kymriah™ Example

18. Off-Label Use of Medications
Outcomes Measures Should Be On-label and Referenced in the Product Label or Package Insert
Do Contract Terms Include Off-label Use
Unsolicited Requests are Permitted Under FDA Guidelines
Academy of Managed Care Pharmacy
“e-Dossier” On-line Service

19. FDA Areas of Concern Communication Issues Off-label Use Concerns
Economic Information
Pre-approval Information

20. Recent Changes to Payor & Manufacturer Communications
21st Century Cures
FDA Draft Guidance
Pharmaceutical Information Exchange (PIE) Act

21. 21st Century Cures
Section 3037 Modernized and Clarified FDAMA Section 114
Expanded the Target Audience for Receiving Health Care Economic Information(HCEI)
Broadened the Range of Information Shared with Payers to Include Clinical and Economic Information
Required Clear Statements Related to Differences Between HCEI and Approved Labeling
Clarified the Definition of HCEI

22. Food and Drug Administration Modernization Act (FDAMA) of 1997
Section 114 Offers a Regulatory Safe Harbor
Increase Dissemination of Health Care Economic Information (HCEI)
Seeks to Define the Type of Data that
Can be Shared
Target Audience of Formulary Decision Makers
Lack of FDA Implementing Regulations

23. FDA Draft Guidance AMCP Recommendations FDA Draft Guidance
FDAMA Audience
Health care decision makers AND health care decision influencers
Health care decision makers only
FDAMA Approval
Should not be subject to FDA approval, use third-party SME group to develop good research practices
Considered promotional and subject to Form FDA 2253 and FDA review
PIE
New molecules and unapproved indications with an intent to file
New molecules only

24. The PIE Act
H.R – Pharmaceutical Information Exchange (PIE) Act Of 2018
To Improve Patient Access to Emerging Medication Therapies by Clarifying the Scope of Permitted Health Care Economic and Scientific Information Communications Between Biopharmaceutical Manufacturers and Population Health Decision Makers
Introduced by Rep. Brett Guthrie (R-KY) in April 2017
Hearing Held July 2017
Voted Favorably Out of Energy & Commerce Subcommittee on Health in January 2018

25. Pharmaceutical Information Exchange (PIE)
The creation of a safe harbor to allow biopharmaceutical manufacturers to share truthful and non-misleading clinical and economic information about medications in the pipeline with population health decision makers proactively at least months prior to FDA approval during the forecasting and rate setting process
Target Audience and Payers Must be Clinically Focused
Need to Avoid Any Appearance of Sales Information

26. The PIE Act

27. Finances

28. Financials Base Rebate Price Protection Volume Caps
Per Member Per Month Guarantees
Cost Offsets
Drug Costs
Medical Expenses

29. Savings Opportunities
Event Avoidance
ER Visits/Hospitalizations
Office Visits
Ancillary Resource Utilization
Reduction in Medical or Pharmacy Expenses Long Term
Reduced Disability Claims
Decreased Absenteeism

30. First Significant Outcomes Contract
Risedronate (Actonel®) Fracture Protection Program 2009
Health Alliance Plan
Alliance for Better Bone Health
Sanofi-Aventis
Procter & Gamble
Osteoporosis and Non-Spinal Fractures
Preferred Tier Requirement with Unrestricted Access
29, 2009

31. Contract Terms Base Rebate Offered Compliance Requirement
Medication Possession Ratio (MPR) Measurement
Reimbursement for Fracture Costs
Hip Fracture $30,000
Wrist Fracture $6,000

32. Current Outcomes-Based Contracts

33. Autoimmune Disease Rheumatoid Arthritis
Contract for Improved Response Rates
Measurements
Radiographic Assessment
Health Assessment Questionnaire Score (HAQ)
Adherence Focused on High Switch Rates in Specific or all Indicated Disease States
Pay Rebates if Duration of Therapy is Short

34. Multiple Sclerosis Contract Based on Relapse Rates of Patients
Measurement of Relapses is the Challenge
ER Visits/Hospitalizations
Steroid Use
Contract Based on risk reduction in relapses for patients on drug
Pure Adherence Measure

35. Amgen - evolocumab (Repatha™)
Harvard Pilgrim Approach
Strict Prior Authorization to Target Appropriate Patients
Contract for Preferred Access
Opted for Exclusive Position
Adherence Component
Performance Measure Based on LDL Lowering
Risk for Higher Use

36. sacubitril/valsartan (Entresto™)
Aetna, Cigna, and Harvard Pilgrim Health Care
Medication indicated to reduce the risk of cardiovascular death and hospitalization for heart failure (HF) in patients with chronic heart failure (NYHA Class II-IV) and reduced ejection fraction
Contract Focused on a Reduction in Hospitalizations in HF population
Extensive Data Analysis Needed to Measure Outcomes
Multi-Year Benefits

37. dulaglutide (Trulicity®)
Indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus.
Outcomes Focused on Patient Response in Terms of Blood Glucose Response
Adherence Requirement
Potential to Demonstrate Value in the Short Term

38. Long Term Goals Multiple Outcomes Contracts for Competing Therapies
Use Results to Make Formulary Decisions/Changes
Assess True Benefit of Treatments
Get Value in Return for Pharmaceutical Dollar Spend

39. Questions?