Addressing Challenges to Adoption of Value-Based Agreements

December 2023, Vol 14, No 6

In a session during the 13th Annual Summit of the Association for Value-Based Cancer Care, held October 18-20, 2023, in New York City, Linde Wilson, MBA, Managing Partner, HealthQuest Advisors, discussed the ongoing challenges related to the development and implementation of value-based agreements (VBAs).

“Perfect Storm” on the Horizon

The broad view is that, although few new VBAs have been developed in oncology and other areas of medicine, internally, there has been a lot of behind-the-scenes action taking place that should bear fruit with new VBAs over the next year.

Likening the current situation to the arrival of Hurricane Hugo, Ms Wilson pointed out that in Charlotte, NC, where she resides, some people prepared for the possible impact of Hugo, while others did not.

“Those who were prepared had a lot less damage than those who didn’t,” she noted. “We are now approaching a ‘perfect storm’ on the need for VBAs on both the health services side and the pharmaceutical side,” she said, implying that preparation is vital.

Over the past 24 months, 70 different pharmaceutical therapeutics have been developed, and each one will cost in excess of $200,000 per year. The national debt is increasing, there is less money to spend in other areas, and yet the price of these drugs continues to increase.

“We can look at this from a private sector or have additional government regulation,” Ms Wilson said.

In the past year, only 6 new VBAs have been negotiated and only 1 in oncology, which has not yet been announced.

“Why has this happened? Is VBA not going to happen? The answer is ‘not really,’” she continued.

One reason VBAs have been on the back burner over the past year is that many pharmaceutical companies have been consumed with figuring out the implications of the Inflation Reduction Act (IRA).

“VBAs went into the back pocket,” Ms Wilson stated. “However, most pharmaceutical companies are now testing the process internally or testing orphan drugs or those nearing the patent cut-off—areas that will not significantly affect the revenue of those manufacturers.”

Addressing Ongoing Challenges

Among the challenges related to the development and implementation of VBAs is the feeling that the current situation will pass, leading to inaction. Other challenges include a lack of understanding of what the actual effect of VBAs will be as well as fear of significant loss of revenue.

Data acquisition also continues to be a challenge for VBAs. “We need to be able to prove that we have or have not reached the end points. We need to figure this out. We also need to determine how to identify the significant end points,” Ms Wilson said.

Research shows that the number one area of interest for payers is hepatitis C. “This is because a significant number of incarcerated individuals and those on Medicare have hepatitis C,” she explained.

The second most cited area of interest is oncology, “because the costs of treatment are so significant that the payers are trying to figure out how to get a handle on these costs,” Ms Wilson noted. “The payers really don’t know how to execute VBAs or what we can do to help them,” she said.

“Now that we have figured out [the implications of] IRA, I predict that we will see an increase in the adoption of VBAs over the next year. I think that they could also be a form of negotiation with the Centers for Medicare and Medicaid Services,” Ms Wilson added.

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