Pharma to put money where the medicine is and give refunds if drugs fail to deliver

Radical new approaches to paying for drugs are being tested in the US and Europe, with payers and pharma companies signing value-based contracts under which rebates are given if patients do not get better.

The contracts tap into real-world evidence to determine whether a drug has lived up to its promise. For example, data from Bluetooth-enabled drug delivery devices and wearable technologies allow payers to confirm patients have followed a prescribed drug regimen and to assess if they are in good health.

The trend fits the value-based healthcare model put forward by Harvard economist Michael Porter and others, which calls for payments to be based on patient outcomes rather than paying for each surgical procedure, diagnostic test or consultation.

In the US, the idea has been boosted by the Affordable Care Act, commonly known as Obamacare, which promotes new payment models that make providers accountable for outcomes.

Real world results

One company at the forefront of the shift to value-based contracts is the biopharmaceuticals company Amgen. Under a new deal with Humana, a health insurer with 13 million customers across the US, Amgen has launched six studies on real-world outcomes, in cardiovascular disease, osteoporosis, neurologic disorders, inflammatory diseases and cancer.

Each will combine claims information from Humana customers with data from wearables, apps and connected drug delivery devices. “This data will help identify patients whose serious medical conditions are likely to result in an adverse outcome, which may lead to the development of algorithms that can predict risk and drive early intervention,” Laura Happe, Chief Pharmacy Officer of Humana, told Healthy Measures.

Humana says its costs were 20 percent lower in 2015 for members who were treated by providers in a value-based reimbursement model setting. 

“By teaming up with Amgen we can study new ways to improve the health outcomes for our members,” Happe said. At the same time, the research should results in new tools and technology to support value-based care.”

For Amgen, the Humana deal is one of 75 value-based programmes it has signed up to in recent years. “The rising cost of disease is challenging the sustainability of our healthcare system in the US,” said Joshua Ofman, the company’s senior vice president of Global Value, Access & Policy. “This is motivating innovators to urgently develop new therapeutic options and partner on opportunities to improve the quality and efficiency of care and reduce financial burden to the system.”

Skin in the game

Amgen has also turned to value-based contracts in a bid to drive uptake of Repatha (evolocumab), the first monoclonal antibody to be approved for lowering cholesterol.

Although it has been demonstrated to be very effective at lowering cholesterol levels, there is as yet, limited evidence of the impact this will have on reducing the incidence major cardiac events, such as heart attacks and strokes, in patients at high risk. And while statins for reducing cholesterol cost around $250 per year, the list price of Repatha is $14,000 per year,

In March, Amgen presented data at the American College of Cardiology annual meeting showing that when used in combination with statin drugs, Repatha led to a 15 per cent reduction in the risk of suffering a major adverse cardiovascular event in patients taking Repatha for 2.2 years.

This means that at $14,000 per annum, an insurer would have to spend $2 million to prevent a single heart attack or stroke. Amgen believes the benefits of Repatha will increase over time, but acknowledged that the two-year data do not provide compelling evidence of cost effectiveness, saying it would “offer additional constructive options in the US to payers willing to remove access barriers.”

Amgen subsequently signed a deal with Harvard Pilgrim Health Care in which it agreed to fully refund the cost if a patient taking Repatha is hospitalised due or stroke or heart attack.

To qualify for a refund, the patient must have been on Repatha for six months and stuck to the prescribed regimen. Harvard Pilgrim’s Chief Medical Officer Michael Sherman said while the drug has been shown to reduce cardiovascular death for high-risk patients there were concerns about the upfront costs.

“We hope to negotiate more contracts of this type, in which a pharmaceutical company truly has skin in the game,” Sherman said. “This agreement is the first we have signed in which there is a full refund of all costs related to the medication if the patient experiences a heart attack or stroke while taking it.”

The two companies also agreed an outcomes-based contract for Amgen’s rheumatoid arthritis drug Enbrel (etanercept). Patient compliance with weekly self-injections will be tracked, along with other outcome measures such as reduced need for steroids. If patient scores are below a specified level, Harvard Pilgrim will pay less for the drug because its real-life effectiveness will be lower than in clinical trials.

“Real world performance of new medicines frequently differs from the well-controlled clinical trial setting,” said Sherman. “By linking the ultimate cost of this drug to its real-world clinical efficacy, this agreement truly puts patients at the centre of focus.”

The insurer built similar conditions into a contract with the UK pharmaceutical company AstraZeneca, when agreeing to reimburse its coronary artery disease treatment Brilinta (ticagrelor).

Patients given Brilinta upon discharge from hospital after a heart attack will be monitored to see if there is a reduction in hospitalisations for repeat acute coronary events, compared to patients on another oral antiplatelet therapy.

Similarly, diabetes patients taking Bydureon (exenatide) to control blood glucose levels, will have their HbA1c levels tracked. If the medicines fail to meet agreed targets, Harvard Pilgrim will be charged a lower amount.

A spokesman for Harvard Pilgrim told Healthy Measures much of the information required to measure outcomes is already held in medical and pharmacy claims data. Now its value will be unlocked.

The insurer has a similar arrangement with Eli Lilly, which will see lower prices apply if patients do better on competitors’ diabetes drugs. “We’re putting our money where our mouth is, not just making claims about superiority, but measuring outcomes,” Eli Lilly CEO David Ricks said.