PBMs push forward toward outcomes-based pricing, despite challenges
PBMs are increasingly seeking to collaborate with drugmakers to help lower drug costs. Photo credit: e-Magine Art/Creative Commons
Fairly or not, much of the progress made in relationships among payers, pharmacy benefit managers, and pharma companies has been drowned out by the noise around drug pricing. It's understandable, given the status of 2016 as a presidential election year (read: yelling about terrible bad things). But the depiction of payers, PBMs, and drugmakers as warring factions is both inaccurate and dated.
Dr. Steve Miller, chief medical officer at Express Scripts, the country's largest PBM, points to his company's annual outcomes klatch as an anecdotal proof point. This year's event set attendance records, both in terms of number of attendees and companies hailing from the world of pharma. “Our relationship with pharma is more substantial than it's ever been,” he says. “Everybody wants sustainability in the marketplace, whether through outcomes- or indication-based reimbursement in oncology or something we don't know yet. It doesn't mean we'll always be on the same page, but we're constantly in dialogue and that's a good place to be.”
Andrew Miller, VP of operations at MeridianRx, a PBM, agrees. “Overall, the relationships are better than you'd think just by reading [the coverage],” he says. “We're all committed to increasing health outcomes and decreasing costs. There's not the philosophical divide that maybe you saw a few years ago.”
There are two commonalities in the responses from the two (unrelated) Millers. The first is that everyone appears to be getting along well enough. The second, however, is that even a general inquiry about intra-industry relations prompts a response that touches on the need for outcomes-based pricing. The question that's increasingly being voiced by stakeholders throughout the system: What's taking us so long?
It counts as progress that such a concern has risen to the top of so many priority lists. While there's nothing new about the notion of outcomes-driven pricing — Merck gave it a try in the late 1990s, offering refunds to patients and insurers if Zocor (simvastatin) didn't lower LDL cholesterol levels — it is increasingly seen as a potential salve for the industry's doomsday economic scenarios. At the same time, there appears to have been some willful naïveté built in to forecasts that outcomes-driven programs could arrive on the scene sooner rather than later.
LOGISTICAL HURDLES APLENTY
It probably goes without saying, but for the record: The implementation of a broad outcomes-based pricing scheme is a wildly, almost gratuitously complicated project. In an ideal world, three things must line up for it to work. First, there has to be consensus that a single care pathway is superior to all others. Second, there must be a mechanism to encourage (read: enforce) the use of that optimal approach. And third, there needs to be a way to measure the direct impact of an intervention (for instance, a patient taking a drug for a given period of time).
You can go deeper into the weeds, but the challenge of aligning those three necessities is the primary reason why outcomes-based pricing — as well as other savings-minded ideas, like the aforementioned bit about indication-based reimbursement within certain categories — hasn't evolved as quickly as many in the industry would like. It doesn't help, of course, that the healthcare system remains “a work in progress,” perhaps the kindest way to put it from an infrastructure perspective.
“What we have, in terms of infrastructure, isn't sophisticated enough,” says EY partner Susan Garfield, co-author of the consultancy's recent report A Road Map to Strategic Drug Pricing. She points to any number of small issues that, collectively, have contributed to delays. “You need data systems that can talk to each other. You need tools to help stakeholders come together to share information that documents the impact of different therapies and processes. You need incentives to drive collaboration.”
And there's more. How long will evaluation periods for outcome measurement last? What data will be needed — and where will it be housed, and who will have access to it? Indeed, practical realities are impeding progress at least as much as philosophical and financial ones.
Express Scripts' Miller believes that most of the important stakeholders know what they don't know, so to speak, but agrees with the gist of Garfield's assessment. “Right now,” he admits, “the systems are just not mature enough to use outcomes as the basis for reimbursement. We're building capacity to get there eventually.” Those enhanced systems, he adds, will need “to truly demonstrate in the real world how valuable, or lacking in value, some products are.”
THE PATH FORWARD
On the plus side, there's no shortage of creative thinking about ways to nudge the industry forward. Dr. Françoise Simon, professor emerita at Columbia University and senior faculty at Mount Sinai School of Medicine, points to a system soon to be introduced in a handful of European countries that places a premium on the most innovative products. “It's kind of an innovation rating on a scale of one to five,” she explains. “Makers of products that rate high for innovation are going to be allowed to negotiate a premium price. Me-too products are not going to be reimbursed.”
Asked if such a system could ever catch on in the U.S., Simon responds, “Probably not anytime soon.” And while she's optimistic about the outcomes era in a bigger-picture sense, Simon notes the headaches experienced in the U.K. during an expansive 10-year study of outcomes-based pricing. “There was a midstream assessment that said, basically, that the data was too hard to get,” she explains, adding that this could bode poorly for outcomes adoption in the U.S. “The U.K. is the size of Texas. That gives you a sense about how big a project this really is.”
Steve Miller is the chief medical officer at Express Scripts.
Garfield, for her part, believes healthcare stakeholders need to depart from what she calls “the land of 1,000 pilots” and start scaling up those programs and systems that show the most promise. “A lot of people are investing a lot of effort into finding a simple measure to show outcome or impact, but the future is going to be more complex,” she explains. “There's not going to be a binary ‘yes, this worked' or ‘no, this didn't work.'”
That's why Garfield hopes players in and around the outcomes debate devote at least some of their attention to narrowing what she calls “the value gap”: the difference between a product's performance in a clinical setting and a real-world one.
“It won't always be that a product performs better in the trial. It may perform better in the real world,” she continues. “So what do we need to do in the real world to enable that potential value and perhaps even enhance it? So many of the answers are going to come from experimentation — from this real-world petri dish.”