Edward Kowaloff, MD, sees outcomes-based drug contracts as a way to deliver better value.

Tying specialty drug costs to patient outcomes

Along with tremendous promise for patients coping with chronic conditions, specialty drugs can carry tremendous price tags, as well.

Generally, specialty drugs are medicines that treat complex illnesses such as multiple sclerosis and rheumatoid arthritis, among many others. These drugs tend to be given intravenously and are quite costly. According to the Kaiser Family Foundation, more specialty drugs have received approval than other medicines since 2010 and, unsurprisingly, have contributed to higher health care spending.

A pay-for-performance leader
So how does an insurer do right by those members whom these medications may help while trying to keep spending contained? Recently, Harvard Pilgrim has emerged as a leader in working with pharmaceutical companies on innovative outcomes-based contracts for specialty drugs. If a specialty medication fails to deliver certain results for Harvard Pilgrim members, for example, a pharmaceutical company will give Harvard Pilgrim higher rebates on that drug, effectively lowering its cost.

Demanding value
Edward Kowaloff, MD, is an internist and endocrinologist at Mount Auburn Hospital in Cambridge, Mass. He sits on Harvard Pilgrim’s pharmacy and therapeutics committee and on other similar local and national committees. Dr. Kowaloff points out that patients’ real-world experience with medications can often differ from the controlled environment of a clinical trial and that outcomes-based agreements give insurers a measure of recourse.

“For the sake of optimizing value for the patient, payers [insurers] are not necessarily buying into the promotion of a drug’s preliminary experience,” he says.

“I do think this is a growing trend,” Dr. Kowaloff adds, in describing outcomes-based contracts for specialty drugs. “For these big-ticket items, it’s saying that we’re willing to engage, but we will insist on quality for our patients.”