Pharmacy Outcome-Based Contracting

Outcome-based contracts are a relatively new contracting methodology focused on shifting reimbursement from volume to value (similar to the medical contracting transition from fee-for-service to pay-for-performance, risk/gain share and bundled payments). The contracts are between a health plan and manufacturer where reimbursement is dependent on pre-defined outcome metrics focused on improving patient responses/health. Outcome metrics include patient access values, adherence/compliance improvements, cost-ofcare reductions and medical resource utilization increases. Manufacturer drugs are administered to plan members, data is tracked for a determined time frame (historically one to three years) and results identify whether the drug achieved desired results. Rewards or penalties are then collected on top of fixed payments paid at the beginning of the contract. This contracting methodology is typically used when a new, more expensive drug—shown to be more efficacious than existing treatments—enters a therapeutic class as a way for manufacturers to gain formulary coverage for sharing in the financial risk with the plan.

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