However, the main logistical hurdles remain in terms of how to achieve a consensus definition of value, how to pay for post-market data collection and analysis, and how to overcome regulatory hurdles such as Medicaid`s “best price” policy. Medicaid`s best price states that drug manufacturers must offer Medicaid programs the best price for a drug or biologic among almost every buyer. This can be a barrier to signing value-based contracts if reimbursement is triggered if a drug or biologic does not achieve a predefined target outcome. At this point, the de facto net price becomes the best price for the entire Medicaid program. Despite the recent increase in stakeholder interest, there has been more talk in the U.S. about the actual implementation of value-based contracts. So far, there have been only 23 publicly announced value-added contracts for drugs and biologics. It was thought that there were 88 such contracts, but details have not been publicly disclosed for three-quarters of them. Internally, before sitting down with the payer to negotiate, manufacturers need to spend much more time evaluating the therapeutic benefit and modeling the risk they take with different types of value-based models. Will we do better (for ourselves, for patients, for payers or providers) if we use a VBA or a traditional reimbursement mechanism? Do the upside potential and value created justify the investment and increased complexity? Similarly, payers need to develop their own value-based models – and determine whether their systems can accommodate therapies that might be priced differently on day 180 and day one. In the future, we need to improve the ability to implement value-based agreements.

If key stakeholders are unable to deliver on their promise to provide innovative and life-saving therapies while making them more affordable, the industry will take a big step backwards to focus solely on price. As the pharmaceutical industry continues to provide innovative therapies for the unmet needs of small patient populations, we must continue to explore market-based solutions that expand access to medicines and continue to drive innovation. Now that you know a little more about value-based contract models, let`s take a closer look at the benefits of this payment model. First, it is important to note that value-based contracts limit the payer`s financial risk by providing for price reductions or refunds for inefficient treatments. In addition, there are a few other important benefits associated with value-based contracting: It`s also worth thinking about the other value-based contracting challenges associated with implementation. .