High Risk, High Reward: Understanding, Embracing, and Aligning on Risks in Your Next Outcomes-Based Contract

Jake Caines

Numerous strategies and tactics are implemented by pharmaceutical manufacturer brand teams to drive awareness. According to Kantar Media, pharmaceutical advertising exceeded $6 billion in 2016. However, value for pharma organizations isn’t driven by awareness alone. The value in awareness is limited as it is commonly cited that 20 percent to 30 percent of medication prescriptions are never filled, and that approximately 50 percent of medications for chronic disease are not taken as prescribed. Shared understanding of both risks and benefits to all parties in the healthcare continuum is essential in order to deliver more value in a pharma environment where every step must be carefully calibrated.

Insurance companies thrive on minimizing risk; health insurers are no exception.

Vickie Andros

Legacy tactics include: prior authorization, step edits and formulary restrictions. The latest strategy has arrived with the advent of the outcomes-based contract, where reimbursement for a drug is based in part on observed outcomes of the drug’s use in a specific patient population. These contracts give insurers a new tool to minimize their financial risk if a therapy fails to generate the expected patient outcome. These contracts also provide the pharma manufacturer the opportunity to deliver on the brand’s promise.

Traditionally, risk minimization for pharmaceutical manufacturers has been predominantly placed upon the MLR (medical-legal-regulatory review) team. The MLR process is a critically important one that ensures that all pharmaceutical product promotions are medically accurate and comply with FDA regulations and other applicable laws. Without exception, this process leaves its mark on all educational, clinical and promotional materials produced by pharma manufacturers. Ultimately the path to the brand commercialization goes through the MLR gate. More recently, however, leadership at both the Business Unit and Brand levels are also being expected to embrace risk as a proactive commercial opportunity and not merely a reactive function of MLR.

We know that improving medication adherence improves outcomes and reduces costs. Frequently, however, the MLR approval gate closes when it comes to the brand team’s encouraging patient adherence or “persistence.” This is the result of MLR taking measures to limit the company’s risk. According to a Public Citizen report cataloging all major financial settlements and court judgements between pharmaceutical companies and federal and state governments from 1991-2015, the unlawful promotion of drugs was the single violation that resulted in the largest financial penalties. While federal financial penalties attributed to the use of unlawful promotion have declined significantly since 2013, total penalties assessed in 2014-2015 still amounted to $263 million.

The new axiom of pharmaceutical marketing centers around patient education and engagement. What’s needed are commercialization activities that encourage medication adherence and impact a measurable health outcome. This approach will align with MLR’s goals and charges. Successful incorporation of this model provides answers to questions like where is the greatest opportunity to positively impact value and manage risk in each step in the patient journey from adoption to compliance to persistence? What can the brand team do? What can’t they do? And how can the brand team create short term gain balanced with long-term sustainability?

Every year brings a new record high in numbers of prescriptions dispensed. In 2016, 4.45 billion prescriptions were filled in the United States, a 13% increase over the number dispensed just seven years earlier and a clear indication that, broadly speaking, brand awareness strategies are highly effective. But what happens after brand awareness? In part two of this four-part series, we will dive into brand adoption and improving prescription conversion rates: getting prescriptions from patients to the pharmacy and getting the product from the pharmacy to patients. In parts three and four, we will explore answers to and mitigation strategies for questions like why do patients not take prescriptions to the pharmacy? Why do patients not get prescriptions filled after they’ve taken them to the pharmacy? Why don’t patients persist in their efforts to take the medication as prescribed?

Brand teams can do things that provide value for the patient, the payer, their own company and the future of healthcare, and we’re going to tell you how. Stay tuned.

About the authorsVickie Andros, PharmD, is Director of Clinical Services, and Jake Caines is Senior Director of Commercial Strategy and Performance, both at Curant Health.