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How payers, drug companies can partner to further value-based payments

Leaders from Anthem and Lilly call for better communication and fewer regulatory barriers

While they sometimes have opposing interests, payers and drug companies can work together so that patients have better access to new, innovative medications, according to a Health Affairs blog post.

"Lilly and Anthem both want the same thing for patients--to have access to new, innovative medicines now and into the future," write Samuel Nussbaum, M.D., former executive vice president and chief medical officer of Anthem, and David Ricks, senior vice president and president of Lilly Bio-Medicines.

While the rest of the healthcare system is moving toward value-based payments, payments for drugs are stuck in an old construct that focuses on price, regardless of the health outcomes of patients, Nussbaum and Ricks say. They call for two changes: improved communication of information so health plans can better price and budget for new drugs, and the removal of regulatory barriers to value-based payment arrangements.

With the move to value-based payment models, insurers increasingly are pushing for drug and device manufacturers to link their prices to resultsFierceHealthPayer reported.

However, under current regulations, drug developers are reluctant to communicate with health plans about new medications that have not yet been approved, the authors write. Health plans, which must price new drugs well in advance, may be surprised by and unprepared for unexpected cost surges.

Anti-kickback statutes, which can discourage drug developers and health plans from working together to create incentives structured around use of a drug in certain patient populations, and government best-price rules are also a challenge to more robust value-based payment arrangements, the post says.

While the authors suggest a partnership between payers and drug companies, the two sides have often been at odds. The battle between drug companies looking to protect their profits and insurers trying to drive down their costs has had a direct impact on health insurance benefits, as FierceHealthPayer previously reported. More than half of all people with health insurance have some medications excluded from their coverage as insurers are increasingly cutting coverage of high-priced, brand-name drugs.

With drug companies able to exercise relatively unrestrained pricing power, drug prices in the U.S. are usually two to six times higher than prices for the same drugs in other major industrialized nations, according to a recent report.

To learn more:
- read the blog post

Related Articles:
The unintended consequences of health insurers' fight to lower drug prices
How insurers, policymakers could drive value-based drug pricing
Payers, providers push manufacturers toward value-based deals