- Boehringer Ingelheim GmbH has signed an outcomes-based contract for one of its diabetes medications with Prime Therapeutics Inc., providing the latest example of a drugmaker and pharmacy benefit manager (PBM) testing out pay-for-performance deals.
- The contract concerns Jardiance, an oral drug indicated for Type 2 diabetes and for reducing cardiovascular death in patients with the metabolic disorder. Prime plans on evaluating the total cost of care for patients taking Jardiance versus other diabetes treatments, seemingly linking payment to whether the drug is more or less cost-effective than competing therapies.
- Prime operates under 18 plans in the Blue Cross Blue Shield Association. The Minnesota-based PBM reported having more than 20 million members in the U.S. as of October.
The pharmaceutical industry's traditional drug pricing model hit some serious road bumps in recent years due to expensive specialty meds and the disruptive potential of gene therapies. While drugmakers and payers are far from reaching a consensus on the best way to address those challenges, they have shown growing interest in value-based contracts as a possible solution.
Value-based contracts tie a drug's cost to how well it performs in the clinic or the real world. A drugmaker may have to offer larger rebates for its product if patients experience a greater benefit from a rival company's treatment. The opposite is true as well. The more effective and safe the drug proves to be, the more an insurer or PBM might have to shell out.
Already, many of the biggest pharmas and payers are playing around with these kinds of deals. Massachusetts-based Harvard Pilgrim Health Care Inc. and Connecticut-based Cigna Corp. have arguably been two of the most active, each inking at least six value-based deals as of November. Eli Lilly & Co. has contracts in place with Harvard Pilgrim for Trulicity (dulaglutide) and Forteo (teriparatide) and with Humana Inc. for Effient (prasugrel), while Novartis AG has contracts with those payers and Cigna for its heart drug Entresto (sacubitril/valsartan).
In Jardiance's case, the drug has sported strong revenues for Boehringer and its partner Lilly since gaining Food and Drug Administration approval in 2014. The diabetes market, however, has gotten incredibly competitive, forcing drugmakers in the therapeutic area to search for ways to gain an edge.
"Diabetes and cardiovascular disease put a significant financial burden on the healthcare system, and we are confident Jardiance may improve outcomes by reducing the overall healthcare costs of people with type 2 diabetes and cardiovascular disease," Christine Marsh, vice president of market access at Boehringer, said in a Jan. 29 statement.
Boehringer's new deal also offers Prime more experience with value-based deals. By late last year, the PBM had entered contracts with Amgen Inc. and Sanofi SA for their respective cholesterol drugs Repatha (evolocumab) and Praluent (alirocumab).
"While not the only approach we take to help ensure members are getting the value they deserve from the drugs they take, outcomes-based and/or value-based contracts are integral to our contracting strategy," added Alec Mahmood, chief financial officer at Prime. "This contract, plus several others we've added in recent months, demonstrate Prime’s continued commitment to align manufacturers, members, payers and providers around the goal of improving health by helping to ensure drugs work as they are intended."