Value-Based Contracts May Lower Patients’ Out-of-Pocket Costs by 28 Percent

Washington, D.C. (February 26, 2018)— In the past two years, commercially insured patients in health plans with value-based contracts for diabetes, high cholesterol and HIV medicines had copays that were, on average, 28 percent lower for those medicines compared to patients in other plans, according to a new analysis from the Pharmaceutical Research and Manufacturers of America (PhRMA).

“Results-based or value-based contracts can reduce health care system costs and can make medicines more affordable and accessible for patients,” said Stephen J. Ubl, president and CEO of PhRMA. “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 data also highlight the potential for results-based contracts to reduce health care costs. For example, if results-based contracts lower the burden of diabetes in the United States by five percent, the United States could save more than $12 billion annually. This data complements an earlier analysis by Avalere that found 33 percent of payers that used results-based contracts experienced cost savings and 38 percent saw improved patient outcomes.

Through value-based contracts, biopharmaceutical companies agree to take on more financial risk, which may ultimately result in insurers offering lower copays and coinsurance for patients.

While these innovative approaches to paying for medicines can improve patient affordability and access, many barriers limit the scale and scope of their impact. To foster more of these arrangements, we need updated rules that better facilitate the responsible and timely sharing of product information with insurance companies, clearer protection for value-based arrangements under the Anti-Kickback Statute and more certainty about how to address these arrangements under government price reporting rules like Medicaid best price.

View the full analysis here

About PhRMA
The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading innovative biopharmaceutical research companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. Since 2000, PhRMA member companies have invested more than $900 billion in the search for new treatments and cures, including an estimated $79.6 billion in 2018 alone.

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