Value-based agreements: Driving a healthcare system shift to improve patient outcomes and reduce cost of care

In the U.S., $3 trillion is spent annually on healthcare with an estimated $1 trillion wasted. The shift in volume to value is an opportunity to align cost-effective medications and care to optimize patient outcomes.

As the U.S. healthcare industry continues to improve outcomes and access to care, innovative value-based agreements must be considered as a meaningful approach to address the unmet health needs of Americans and our healthcare system.  

Innovative value-based agreements represent an important step toward a healthcare system centered on improved patient outcomes and reduced medical spending. Value-based agreements are driving this shift beyond transactional care to a system where payers, health systems and doctors are incentivized by value of care and patient outcomes, not volume of care provided. 

Boehringer Ingelheim, a leader in value-based care, has worked with national and regional payers to develop best-in-class value-based agreements designed to more closely link the value of our treatments, across multiple chronic care categories, to improve patient medical outcomes and/or reduce cost trends associated with using these important medicines.  

In our view and experience, value-based agreements are part of a solution that allows greater flexibility in how payers and biopharmaceutical companies can collaborate to support the shift to a value-based healthcare system.    

While value-based agreements are not a panacea to reduce drug expenditures, they do offer an opportunity to bend the cost curve and provide optimal patient outcomes at the same time. Value-based agreements are more complex than volume-based contracts, but the industry has shown they are sustainable. Over the past several years, the industry has observed that many value-based agreements between payers and providers can be implemented, all with unique attributes and benefits and continued incentive that value-based agreements are in place. Now, we are starting to see this between payers and biopharmaceutical companies.

Value-based agreements between payers and biopharmaceutical companies have a role in reducing uncertainty for payers about how the cost of a medication will translate in the context of helping the patient, improving outcomes and/or lowering overall costs when applied across various patient populations. 

If the focus of the value-based agreement is on high-cost/highly prevalent disease areas, then the objective is to track and measure the outcomes from a population-based standpoint. The infrastructure is rapidly evolving to meet these needs. In high-cost/low-prevalence disease areas, systems have already been established (e.g., through Specialty Pharmacies) to track individual patient outcomes.

Value-based agreements have challenged biopharmaceutical companies to innovate based on not only what the clinical unmet needs are, but also what the societal unmet needs are, including reducing healthcare resource use contributing to medical spend and overall total cost of care. To address these needs, more investment is required to ensure that new products demonstrate cost-effective outcomes, which is important to payers.  

In the therapeutic area of weight management, payers currently consider these treatments as “lifestyle modification” products and do not reimburse unless the employer or plan sponsor pays a rider fee on top of their current premiums. We believe that, due to the clinical comorbidities of obesity (e.g., joint pain, diabetes, lung, liver, and cardiovascular disease, depression/anxiety), if individuals are able to reduce their body weight, then costs associated with obesity-related conditions can be reduced. While the FDA only requires safety and weight-based outcomes to earn an indication, payers require more complex, rigorous investment in clinical trials to show outcomes for related conditions prior to bringing the product to market and additional evidence is needed to offer a meaningful value-based agreement. In this case, considerably more investment (and more financial risk) is required to produce the additional evidence needed to demonstrate a treatment’s effectiveness.

Innovative value-based agreements should be designed to rely on how a medicine, such as one of our diabetes medications, performs in a real world versus a clinical trial setting. The outcome of reducing the risk of cardiovascular death does not always resonate with payers, which is why measuring total cost of care savings compared to previous standard of care was the basis of its value-based agreement offering.

As experience and progress is gained between biopharmaceutical companies, payers and health systems, innovative value-based agreements will offer an important and effective approach to providing patients with medications that demonstrate the most effective outcomes and help reduce overall healthcare spend. We’re proud to contribute to this healthcare system shift through innovative value-based agreement solutions.