The Future of Pharmacy’s Involvement in Value-Based Contracting, Potential Benefit to Pharmacy’s Bottom Line

Pharmacy Times interviewed Jayson Slotnik, JD, MPH, partner at Health Policy Strategies, on his presentation at Asembia Summit 2022 titled Valued Based Contracting: Expert Updates & Strategies for Success.

Question: What has been pharmacy’s involvement in value-based contracting?

Jayson Slotnik: Up until now, there has been very little to no involvement with pharmacies in value-based contracting. In general, there hasn't been much value-based contracting, so it's not unreasonable to expect that there has been very little pharmacy involvement in value-based contracting.

Now, that having been said, with some upcoming changes to some laws and regulations—governing pricing—many stakeholders in the health care system believe that there will be more value-based contracting coming along. So hopefully, if those are constructed correctly, the pharmacist can be involved, specifically around adherence and compliance of taking medicines to demonstrate an outcome that is part of the value-based care.

So, for example, if a manufacturer with a payer has a value-based contract that results in an outcome like a lowering of cholesterol and managing of diabetes, obviously, in those situations, the pharmacist can play a very important and key role because they are the conduit between the manufacturer and the health plan, and most specifically the patient, and can drive adherence and compliance through the outcome to drive that outcome. Now the question is that takes time and effort, and will the pharmacist get paid for doing that, and hopefully, the pharmacists can be well compensated to do that. They'd have to have their systems in place. So there might be some investment required in terms of outreach to patient, tracking patient interaction, but then they could be compensated for their time.

Now the question is, who's going to compensate them? Is it going to be the health plan? Is it going to be the manufacturer, and that's going to be the ultimate sort of stuck in the middle, maybe both will pay, which we can believe is not going to happen. Rather, the pharmacy will have to figure out who's going to pay them, my guess is going to be the payer is not going to pay them rather than manufacturer will because it'd be the manufacturer that has the most to gain in the value-based contract.

From a financial point of view, you'd want to think that the payer would want to pay because they have a lot to gain from an outcome point of view with a patient. But many years of doing this and appropriate, if maybe an inappropriate level of cynicism, tells me that it would likely be the manufacturer will wind up paying the pharmacist.

So, at the end of the day, my advice to the pharmacist is to invest a little bit in better technology, in terms of being able to communicate with patients, measure outcomes, pick very unfortunate prevalent diseases, like I mentioned, diabetes, cholesterol, or the other way, which is identifying diseases where there are high-cost oral medicines, where there's a lot of money on the line if a patient is not adherent or compliant.

So, in general, the approach is do you go population health, or do you go drug-specific health, disease system specific, and try to demonstrate a niche—they're specialty, they're driving adherence to compliance, so that at some point, the specialty pharmacist, or the pharmacist in general, can participate in a value-based contract.

Question: Could value-based contracting help the bottom line of the pharmacy?

Jayson Slotnik: So can value-based contracting help the bottom line of the pharmacist? Possibly—it all depends on how the pharmacist can drive the outcome as part of the value-based contract.

So there are going to be many different flavors of a value-based contract. One could be an annuity payment, in other words, payment over time. In that situation, probably not much for the pharmacist because the drug is dispensed, the pharmacist gets paid, and then the rest of the money is gone between the payer and the manufacturer. There's not room there if it's just an annuity.

If it's a target to a specific outcome, there is a roadmap there for perhaps a lump sum payment, or maybe even the pharmacist goes at risk for his or her share of the work required to drive towards that one outcome. Similarly, a similar flavor would be if it's a maintenance of an outcome like a cholesterol level or diabetes level data, [pharmacists] could be compensated in smaller amounts or incentivized over a larger period of time to meet that outcome.

But like I said in the beginning, in general, it'll depend on the pharmacist’s skill set—retail, specialty, what drugs they serve, their own clinical background, their network, their relationships with manufacturers and payers—that will determine the financial opportunity within the value-based contract construct.

Question: What are your hopes for the future of value-based contracting?

Jayson Slotnik: So my hopes for the future of value-based contracting is that it evolves into a real opportunity and option for all the stakeholders involved, principally the manufacturer, the payer, and the pharmacist or the distributor—whoever is involved in making sure the product goes from point A to the patient and driving towards the best outcome for that patient. I hope the market evolves because it is a way to incentivize better care, and therefore better outcomes. Therefore, it's good for everybody in the health care ecosystem.

How the pharmacist gets involved, and my hope for them, is that they are treated with the appropriate respect and deference to [allow them to] do what they do best, which is dispense [and] counsel patients on interactions or side effects, adverse events, and be the one in the position to help manage some of the adherence, compliance, and drug ramifications. Up until now, the pharmacist really hasn't been given that much respect, especially on the specialty side, and I hope that changes in the future.