12. Outcomes-based risk sharing (Value Based Agreements) for pharmaceuticals

However, what if the drug does not perform as anticipated? why?

number one reason why the drugs don't perform? adherence?

VBA steps in creating a VBA (3) design - 4

stesps- design, adjudiction, result DESIGN design - RCT or observational/ matching vs. non matching weighing risk vs benefits for key stakeholders outcomes - type of outcome - aggregate or patient level - positive or negatie - optimal time Is data proprietary? Sharing data: Confidentiality block chain - bitcoin -> date sharing through this technology

charas of VBAs data collection - initiated price or reimbursement objective is to address what arrangement provides

1. Program of data collection between manufacturer and payer To address uncertainties about long-term effectiveness beyond trial duration For specific patient sub-groups 2. Data collection initiated after regulatory approval Linked to post-launch coverage decision 3. The Price or Reimbursement is linked to outcome of program of data collection Explicitly - higher rebate Implicitly - renegotiate coverage 4. Objective is to address uncertainty about one of the following Test effectiveness compared to the current standard of care Test effectiveness in broader population than RCTs Test effectiveness on end-points more clinically relevant or long-term than tested in RCTs (instead of surrogate) Test adverse events Test adherence issues 4. Objective is to address uncertainty about one of the following (continued) Whether healthcare provider management (usual care) may impact harms and benefits Size and value of off-sets, such as due to fewer hospital visits Number and types of patients likely to be treated in real world practice Identify the "right" patient to be treated, which the payer is willing to fund (may or may not include off-label use) 5. The arrangement provides a different distribution of risk between the payer and manufacturer than does the historical relationship

Benefits of publicizing VBAs 4

Allows a company to signal to customer and public that value is an important issue for them They are at the forefront of drug pricing debate They have credibility and experience to advance value based payment discussions and policies transparency is important

Prevalence of VBAs in the US promoted VBA? NOT?

Are VBAs made public? Q) In your opinion, why would key stakeholder make or not make VBAs public? when would you promote a VBA? transparency is important when you would not? not good for competition

Manufacturers use Pharmacoeconomic techniques to highlight the benefits of drugs 3 type of analysis assess, compare, results are used for

Cost-effectiveness analysis (CEA) Cost-utility analysis (CUA) Cost-benefit analysis (CBA) Gives you the ability to assess economic benefits of using the drug Ability to compare with other competitive drugs Results used for negotiations between manufacturers and payers allows you to compare the drug to other competitive drugs which you cannot do during a RCT

Reasons for failure of VBAs as per payers and manufacturers

Data collection and evidence development Availability of appropriate outcome measures Implementation costs Disagreement over incentives Medicaid best price don't like sharing data

How many VBAs are in the US?

Total of 26 are publicly disclosed in the US 71% - 74% of all implemented VBAs are not made public

Drawbacks of not making VBAs public 3

Underestimate their use in market Learn from previous experience and improve on VBAs As per payers and manufacturers, risks outweigh benefits Exposure to public scrutiny Yielding competitive advantage

Benefits outweigh risks - helps reaching an agreement

benefit High disease burden Unmet need Clinical, Economic and Humanistic Benefits risk Lack of real world data Financial uncertainty

Value Based Agreement (VBA) between 3 entities ensures risk shared aka

drug manu, payer, patients value based agreement or outcome based agreement is a policy that ensures that all parties share the risk you either deliver the promise or face the consequences for not delivering the promise Example: Amgen - Harvard Pilgrim VBA for Repatha (Evolocumab) Additional rebate on cost of Repatha for every patient that has a MI or stroke

Payers may take the risk of covering the drug little real world evidence choice of drugs is complicated bc

from payer's perspective absence of real world evidence in their specific patient population = increase risk of covering the drug Also, with the availability of multiple approved drugs the choice of drugs becomes complicated

VBA reimbursement is linked renates incnrease

performance linked reimbursement --> Eg. Additional rebates if results not achieved coverage with evidence development --> Objective is to test whether the drug works and subsequently decide whether to cover it Goal: to provide coverage while evidence is developed. Eg. Identify high risk patients, adverse events, comparative effectiveness Goal: Negotiate reimbursement based on agreed upon performance OIR: Coverage conditional on individual participation in research. Not all indicated. are based only on those patients who were voluntarily included in an observational study or trial. In the OIR case, not all patients who fall within the indication will have access or exposure to the new technology. OWR: Coverage conditional on agreement to conduct a study that informs the use of medical product in the payer patient population. All indicated patients but research in a small subset: apply to all new indicated patients who might be treated by using the new technology, with research taking place only in a subset or even in another health system.

Flow of resources in healthcare system - simplified best possible tier means negotiate rebates based on better rebates = tiers rebates are based on

want to ensure that the drug is on the best possible tier on the formulary meaning less competition negotiate rebates based on the performance of the drug better rebates drug put on better tier based on volume higher the volume (sell) higher the rebates (rebates are volume based)

How to share risk? 3

Drug Manufacturer Payer Patients- Patient has already consumed the prescribed drug

Phase 3 RCTs are conducted in controlled settings patients are certain groups of patients what kind of compare

Drugs receive approvals from FDA based on RCT data In RCTs: Patients are closely monitored Certain groups of patients are excluded - high affinity for adverse events or certain comorbid conditions Surrogate markers RCT are not real world evidence- studies that are performed in highly controlled population look at surrogate endpoints and look at placebo as a comparator

ICER provides VBP benchmark costs linked

ICER provides value based pricing benchmark (cost is linked to performance)

Patients treated in real world may not always have the same characteristics as in RCTs in the real world label use? real world setting provides what

In real-world, patients could be different than those in RCTs: More severe Have multiple comorbidities Certain health care plans may have certain groups of patients eg. older, working, higher or lower income groups Off-label use real world setting provides the actual picture of how the drug will work

Strike a balance between Payer and Manufacturer objectives manu - access to patient, formulary, price, maximize payer - ensure patients receive, minimize risk, comply with 2 things

Manufacturer Objectives: Obtain broad access to patients Preferred placement on formulary Achieve the best price Maximize return on investment Payer Objectives: Ensure patients receive access to new and innovative therapies Minimize risk between efficacy and real world effectiveness Comply with budgetary constraints Comply with public and political pressure

The non-optimal performance of drugs could be used to receive higher rebates

Patient lacks access to the most effective drug patient still has access to drug which is not effective the risk is only shared by the patient

Most common measure used in VBA - Medication Adherence payment triggers patient selection

Payment tied to improvements in adherence (eg. Merck and Cigna VBA Januvia) Patient selection based on adherence (only include patients who have reached a certain level of adherence) Payment trigger (outcomes based component does not take effect until certain level of patient adherence is achieved)

How to measure Medication Adherence in secondary databases? PDC MPR measre? what is good adherence?

Proportion of days covered (PDC) Medication possession ratio (MPR) Discontinuation (persistence) Calculated based on versions of following = (Number of days of medication supply in a time period) X 100% time period Why measure medication adherence? Because medications do not work in people who do not take them Generally, ≥ 80% is good adherence

Manufacturers use Pharmacoeconomic techniques to highlight the benefits of drugs single payer multi player

RCT data --> real world predictions single payer -Modeling performed/evaluated by independent organization multi payer - Modeling performed by manufacturers, academia / Modeling performed by Institute of Clinical and Economic Review (ICER) is a 3rd party independent reviewer in US

Goals of Value Based Agreement (VBA) share provides acess reduce CREATES VALUE optimize

Share risk Provides timely access to innovative therapies Reduces financial and clinical uncertainty Creates value to patients Might not always lead to reduced costs but optimized costs and outcomes