I was able to sit down with Erin Hulbert, the director of the value-based services team at Optum® Life Sciences, to discuss what it takes to enable value-based contracting arrangements between life sciences manufacturers and the payer community.
To kick things off, Erin, as the resident expert on the design and measurement of value-based arrangements, what are you hearing from life sciences organizations when it comes to these contracts?
It comes down to a 50/50 mix of interest and hesitation. The wider health care industry has talked about tying payments and reimbursement to actual outcomes and value for years now, so I think there’s a lot of recognition that the life sciences space needs to get ready to adopt more sophisticated approaches, too.
Change is always difficult, but there are three true hurdles that our industry needs to overcome before these types of arrangements become more widespread.
- The first is figuring out what constitutes a good outcome. That means agreeing to a definition of metrics that are actually measurable in the real world.
- The second is actively following treated patients over time. In the U.S., people change insurers for any number of reasons, and your data doesn’t always follow you from one to the next. Your previous health plan has no way of knowing your current state of health or if one of these massively expensive treatments has worked for you.
- The third is figuring out all the details of outcomes measurement, reporting and financial reconciliation processes. This is one of those complex, headache-inducing messes that doesn’t have a simple answer, and I think clients on both the pharma and the payer sides are looking for ways to make this easier.
I’d love to get your perspective on outcomes-based contracts for gene therapies. How do they differ from the more traditional value-based arrangements that your team supports?
I’m excited to talk about this, as these therapies have the potential to be truly transformative. As such, there is great urgency for patients and their families to have access to these therapies.
But despite the great efficacy and safety results achieved in clinical trials, we need to learn more about how these therapies will perform in the real world and identify how to connect them to the patients who will benefit most.
One thing that is unique is that gene therapies are ultra-high-cost treatments, which means multiple years of resources are used or paid out upfront, under the assumption that the therapy works and achieves savings and benefits over time.
This is a big risk to the payer. First, they’re assuming that the therapy works, and second, they’re betting that the savings will be realized by that payer, since we know that patients in the U.S. change health plans often. So, we need to track patient outcomes over several years, even as they switch payers.
Second, most gene therapies in the market or in the pipeline focus on rare disease, so the eligible populations are small. That means we need meticulous patient-level outcomes tracking over time, which presents its own set of unique challenges.
Working with groups this small is very different from a more standard value-based contract where we often calculate a population statistic and apply that to all the claims for that therapy.
The small sample size introduces variability to all the stakeholders — including the payer and the manufacturer — and that means it is so important to capture every outcome, all the successes and the failures.