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Improve outcomes and reduce costs for emerging therapies

By AmerisourceBergen

How biopharma companies engage with alternative payer engagement models
vaccines on top of US dollars
4-minute read
vaccines on top of US dollars

Healthcare tends to have a domino effect: When science innovates, payment and patient access mechanisms should too. 

That's what many biopharma companies are learning as they engage in alternative payer engagement models such as value-based contracts. An indicator of a rapidly changing healthcare landscape, these new models aim to reduce costs while improving outcomes amid a crowded market of emerging — and perceivably unproven — therapies.

vaccines on top of US dollars

Increasingly, payers and biopharma companies are establishing such alternative relationships. Take Highmark, for example, which entered an agreement with UCB in which reimbursement for CIMZIA® depends on the therapy's clinical effectiveness. Similarly, Takeda and Point32Health engaged in a risk-sharing contract for ALUNBRIG®.

They're not the only ones. Roughly three in four managed care personnel have gotten involved in an innovative contract with biopharma companies, according to a recent Xcenda survey of U.S. payers.1 More than anything else, innovations in pharma-payer contracting offer value in a time when proving it has never been more critical.

But while payers have an appetite for these innovative models, they're far from guaranteed. Biopharma companies should bear in mind what formulary decision-makers need and want before proposing alternative instruments. Taking insights from an AmerisourceBergen survey among more than 50 payer advisors, here's what biopharma leaders need to know.

Payer experience with innovative contracting is both prevalent and repeated

Zooming in on the insights of the AmerisourceBergen survey, it's clear that payers' experience with innovative contracts is gaining traction, and even expanding. Roughly two-thirds of payers (63 percent) report having three or more innovative contracts pending or executed in the past 5 years.1

Those contracts can vary from performance-based to finance-based, although many hybrid versions exist. In the survey, outcomes-based contracts were the most commonly reported type (84 percent) and potentially the most valuable: 65 percent of respondents said outcome-based arrangements positively impacted patient outcomes and/or costs.1

Payers reported having experience with many other financial models, representing the diversity of innovative contract agreements in the market — from quality initiatives (16 percent) and shared savings (16 percent) to research collaborations (16 percent), subscription models (14 percent), and disease management programs (14 percent).1

As far as which disease areas garner the most interest for these alternative arrangements, respondents cited diabetes, hepatitis C, and multiple sclerosis as the most common in the marketplace today — and also the most likely to benefit from cost reduction and outcomes improvement. There is also a clear indication that these models stand to grow in the future, with 70 percent of payers saying they were extremely or very interested in pursuing outcomes-based contracts (and 49 percent saying so with shared-savings models) in the next 5 years.1

Collaboration between payers and manufacturers is key

Payment agreements should ideally be objective, measurable, easy to manage, and most importantly, meet each party where they are. Most respondents (95 percent) said that having simple and easily measured outcomes was the most important factor when establishing partnerships with biopharma, followed by having a reasonable contract time frame (84 percent).1

Biopharma companies should consider these insights when collaborating with payers for alternative agreements. Models should address the efforts and risks associated with proving financial and clinical value and target programs that can deploy within a finite period of 6 to 18 months. A detailed measurement plan can help map out the time-based benchmarks necessary for progress.

In addition, report on metrics that payers care about — which, according to the survey, are improvements in clinical outcomes such as length of therapy and avoidance of resource use such as hospitalization. Achieving both aims can go a long way toward sustaining payer engagement for the long term.

Some of the key success factors

Despite their promise, innovative contract agreements face barriers that can hold a successful partnership back. There's the operational burden to consider — as well as downward pressure on pricing and certain regulatory risks.

In response to these challenges, biopharma companies are increasingly engaging partners that sit between biopharma companies and payers as pseudo-brokers to absorb risk and handle cash flow.

Pooling risk and resources over multiple products allows these intermediaries to pay biopharma companies upfront while assuming the payer's costs if therapies fail to deliver. As a result, biopharma companies benefit from the outcome-based agreement without participating directly and can encourage payers to cover emerging products.

No matter the model, payers have likely seen it all in when it comes to alternative arrangements. Biopharma companies can capitalize on their interest, but only if they deliver what risk-bearing entities want — financial and clinical value alongside innovative science.

Still, there are risks to these models, and that's where third parties help. Intermediary support with a broad exchange of information means that everybody wins, patients most of all.


1. Speck, M, et al. Innovative contracts between healthcare payers and pharmaceutical manufacturers: A survey of US payers. AmerisourceBergen. Presented at AMCP Managed Care and Specialty Pharmacy Annual Meeting; March 29-April 1, 2022.


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