The challenge of designing new payment models for prescription drugs 

Drug prices
There are a number of barriers to expanding value-based payments to drugs, experts say. (Getty/Charles Wollertz)

Prescription drug markets have yet to align with the drive for value-based care in the provider market, and plenty of hurdles stand in the way of that process, experts say. 

The biggest barriers? Coming up with a clear definition for what "value" means when it comes to medications and a lack of evidence to spur a change in how drugmakers do business, Mark McClellan, M.D., Ph.D., co-chair of the Health Care Payment Learning & Action Network and the director of the Duke-Margolis Center for Health Policy, said.

These challenges “complicate” an already-complex system that’s starting from the ground up on outcomes-based or evidence-based pricing, McClellan said. If the barriers are addressed, payment models within the network's framework—which ranks models on a scale from one to four based on how closely they are linked to fee-for-service payments—are far more likely.

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Subscription-based models for certain patient populations, for example, could be the future, he said. McClellan moderated a panel on value-based payment models in the drug space at the LAN Summit this week. 

RELATED: Future CMS innovation center initiatives could include outcomes-based drug pricing, telehealth 

Peter Juhn, M.D., vice president for global value-based partnerships at Amgen, who works to bring different stakeholders together on new payment models, said all of those factors can prevent potential partners from coming together. 

“No one is really willing to make the first step,” Juhn said. 

Amgen is one of the pharmaceutical companies that have dipped a toe into an outcome-based pricing arrangement. It built a deal like this for its drug Repatha, a product for patients with high cholesterol levels, with several payers, in which it will repay the cost of the drug if the patient suffers a stroke or other complication it was supposed to prevent. 

Part of the hesitancy on the part of the industry, he said, is that it’s easier to just keep on with the current model; it works and that’s far less work. 

RELATED: CMS allows Medicare Advantage plans to negotiate Part B drug prices, implement step therapy 

A crucial strategy to breaking down some of these barriers is data, both gathering it and using it to analyze individual patient populations, said Surya Singh, M.D., corporate vice president and chief medical officer for specialty pharmacy at CVS Health. Using data to “connect all the dots in our disparate system” and to paint a better picture of the patients who benefit most from new drugs is key to building better payment models to improve access, Singh said. Alternative payment models can drive improved diagnoses in addition to tracking outcomes associated with certain medications, Singh said.

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