Value-Based Contracts and Health Systems Specialty Pharmacy Integration: 2 Key Insights From Asembia 2017

With more than 5000 attendees, 100 seminars, and 900 companies befitting a $150 billion industry, the annual Asembia Specialty Pharmacy Summit maintains its place as the industry’s leading event. While its growth continues to make the valuable new connections difficult amid the hubbub and crowds, Asembia 2017 delivered high-value insights about 2 of specialty’s hottest topics: value-based contracts and the race for health systems to enter the specialty pharmacy space.

Here are our top takeaways from Asembia 2017.

Integrated Health Systems and Specialty Pharmacy Integration: Proceed With Extreme Caution

Integrated health systems and large hospitals are racing to enter the specialty pharmacy space, which they perceive to be a highly lucrative proposition. The top question that they must address is how: build or partner? This explains, in part, why we saw far more health systems represented at Asembia 2017 than in any other year in memory.

Asembia is an outstanding event, during which those entities can get educated about the intricacies, nuances, and risks associated with specialty pharmacy as a business that is incredibly complex and often crosses the border into convoluted territory. Driven by an interest in moving towards a health maintenance organization (Kaiser) model and perceived profit generator, we, and industry colleagues like Apogenix, urge health systems to use extreme caution when considering their next steps in specialty pharmacy.

The resources required and mandatory risks to assume should be impossible-to-miss red flags that prudent health systems acknowledge and assess before advancing a build strategy. As Adam Fein, PhD, president of Pembroke Consulting, detailed during Asembia, the battle being waged over the patient journey, especially relating to data access, may be driving systems to enter the specialty pharmacy space as well.

That said, distribution network issues, direct and indirect remuneration fees, and loss of focus from the core business for a poorly compensated piece of the puzzle are the top reasons health systems should proceed in their specialty pharmacy integration plans with extreme caution. The most prudent path forward appears to be partnering with a stable specialty pharmacy committed to improving patient outcomes through programs proven to improve adherence and reduce the overall health care spend.

To Maximize the Potential of Value-Based Contracting: Keep it Simple for Now

Few, if any, first generation value-based contracts among pharmaceutical manufacturers and payers have achieved success levels necessary to drive systemic change. This is largely because many of these agreements cover only 1 drug, and/or rely on volumetric math as the arbiter of contractual conditions and payment. That appears to be changing.

Contracts that base reimbursement on the value-based notion of improved patient outcomes, in addition to drug efficacy, are compelling and gaining traction. Manufacturers can benefit from pharmacy and medication therapy management partners with proven capabilities in improving adherence and patient engagement. This frequently results in positive health outcomes, such as sustained virologic response, thereby realizing greater therapeutic and financial potential of their specialty therapies.

In a November 2016 column for Forbes, Novartis CEO Joseph Jimenez wrote, “We believe in the efficacy of our products, and by collaborating with payers on solutions for reimbursement, we hope to help start a shift toward value pricing in the health care system.”

According to a Deloitte presentation at Asembia 2017, pressures driving the shift from volume to value include reimbursement shifting to outcomes, consolidation of buyers, increased competition thanks in part to generics and biosimilars, and more highly engaged patients sensitive to increasing out-of-pocket costs and gaining increased access to information. What we found particularly curious was the assignment of patient adherence to therapy as an uncontrollable factor among the challenges in executing new value-based agreements.

At Curant Health, our medication management programs are proven to improve adherence among chronically ill patients. It is difficult work, but we would disagree with the assertion that patient adherence is uncontrollable. It is absolutely true: value-based contracts are relatively young tools and will undergo continuous change for the foreseeable future. Our best advice is to start simple and select your outcomes measurement data carefully.

For example, A1c count may only be measured in 30% of the diabetic population. The value-based contract gold standard will likely be significantly different from the clinical gold standard due to data limitations. In the end, value-based contracting is about data, its quality, and using it to generate better clinical outcomes. Organizations that effectively ameliorate the shared pain points between manufacturers and payers will be winners.