A majority of payers in new survey used an outcomes-based contract to lower drug costs

Health cost transparency
More insurers and PBMs have entered into an outcomes-based contract as the method grows in popularity. (Getty/cyano66)

A recent survey of major payers found that 58% had executed an outcomes-based contract with a drug manufacturer in 2019, up from 24% in 2017.

The survey released Tuesday from the consulting firm Avalere shows that outcomes-based contracts, where the drugmaker is paid by an insurer based on the effectiveness of their product, are gaining steam despite concerns over regulatory hurdles. The survey updates prior versions conducted in 2017 and 2018.

Avalere’s survey of 50 health plans and pharmacy benefit managers found that 63% of payers with an outcomes-based contract are considering additional ones, and 26% of the respondents not in a contract are in talks to enter one.

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“Payers are consistently seeing cost savings as a benefit of [outcomes-based contracts],” Avalere said. “Although the proportion of payers reporting cost savings as an advantage decreased slightly from 2018 (74% to 59%), this represents a substantial increase from 2017 (33%).”

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However, many payers still are reporting implementation costs as an obstacle for entering into such contracts. Another major problem is hard-to-measure outcomes for the products.

Avalere also explored how payers want outcomes-based contracts to be structured. The preferred metrics for payers include symptom improvement and laboratory values.

“Payers report more willingness to enter [outcomes-based contracts] when manufacturers take on and share financial responsibility for clinical outcomes,” the survey added.

RELATED: Costly specialty drugs drive higher spending on provider-administered treatments, study finds

A majority of plans also use several ancillary services in a contract to improve effectiveness. The most popular is a patient adherence program with 62% of respondents.

Private insurers aren’t the only ones looking to outcomes-based care to lower drug costs. The Centers for Medicare & Medicaid Services is also looking into such an approach to lower the costs for high-price specialty drugs.

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