In response to rising health care costs, value-based arrangements (VBAs) have emerged as a mechanism for changing how we pay for high cost therapies in the U.S. by linking payment for a biopharmaceutical treatment or product to its real-world performance. However, a new analysis from the National Pharmaceutical Council (NPC) suggests that while VBAs can be one of many tools that payers leverage to address rising costs, it is also important to recognize “the strengths and limitations associated with this model and to set appropriate expectations for what VBAs can realistically achieve.”
The analysis, by NPC Chief Science Officer and Executive Vice President Robert W. Dubois, MD, PhD, Vice President for Health Services Research Kimberly Westrich, MA, and former research manager, Lisabeth Buelt, MPH, was published in Value in Health and examined the role of VBAs within the broader context of the U.S. health system’s transition toward value-based payment.
Citing a previous NPC analysis on the prevalence of VBAs, the authors explain that “although VBAs are being implemented more often, several challenges to advancing value-based contracts remain” and if VBAs are to reach their full potential, ”it will be important that key barriers to implementation are addressed.” However, even if all legislative and regulatory barriers were hypothetically addressed, are VBAs alone enough to meaningfully contain costs?
The authors suggest that “as we think about the role that VBAs can play in the U.S. health system, it is important to consider three key questions” and to set appropriate expectations for VBA performance. These questions include:
- Are there enough drugs that meet the ideal criteria for a VBA (i.e., drugs that are associated with clearly defined outcomes that can be easily captured and reliably measured over a relatively short timeframe. Not all drugs are a good fit for a VBA; if few meet the ideal criteria, the model’s applicability will be inherently limited.)?
- Does the share of drugs that meet the ideal criteria for a VBA represent a large enough portion of health care spend to be important?
- Are VBAs likely to be structured with enough financial risk to meaningfully affect overall spending?
The authors note that “there is substantial multi-stakeholder enthusiasm about the potential for VBAs to transform how we pay for highly effective, high cost therapies.” However, due to inherent limitations associated with the VBA model, “it seems unlikely that solely using the VBA model will result in meaningful change to the U.S. health system.” Instead, the article suggests that “VBAs offer an opportunity for the U.S. health system to achieve higher value for dollars spent when implemented in combination with other value-based payment mechanisms and policies that disincentivize low-value care.”