Health plans should be more willing to pay for high-cost drugs if they actually produce the results patients expect: cures, symptom relief, etc. But pay-for-outcome deals are few and far between.
Abarca Health –a small pharmacy benefit manager (PBM)– recently announced an outcomes-based deal with Amgen for Enbrel. I interviewed Abarca’s chief operating officer, Javier Gonalzez about the announcement.
This is your second deal with Amgen. How did the first one go? What did you learn from it and how did that impact the Enbrel contract?
Abarca is in the process of implementing the outcomes-based agreement with Amgen for Repatha. Because of the innovative and complex nature of these agreements, implementation takes time both with the drug maker and the health plans.
All parties have learned a lot throughout this process, and we expect implementation to get faster with new agreements. We also know that each outcomes-based contract is different. What looks like success for a patient with high cholesterol–like those who take Repatha–might not be the same for someone who is taking Enbrel for rheumatoid arthritis.
The key to a successful outcomes-based contract is collaboration–so this process has allowed Abarca to build a solid working relationship with Amgen. Our organizations are very much aligned in our belief that these agreements have the potential to disrupt the entire healthcare reimbursement system.
The Enbrel arrangement is positioned as an outcomes based contract, but the outcome is just whether the patient stops using the drug. Why not something more advanced, like a clinical measure?
Although our agreement for Enbrel will initially measure discontinuation, we will also be collecting data that drills down further into why the patient stopped treatment–which could be related to side effects, adverse events, or failure to meet therapeutic outcomes.
Though we would like to see additional clinical measures become the determining factors for outcomes-based contracts, it’s important to remember that these agreements are still very much in their infancy. Manufacturers are proceeding very slowly and picking some basic pharmacy therapy outcome endpoints that are reliable and readily accessible—medication adherence and discontinuation, for example—as they build experience.
But, as payers and PBMs build frameworks that can connect disparate patient health data points, and report outcomes through robust analytical platforms, we believe that they will be in a better position to take these agreements to the next level. To help move the industry to this point, Abarca is developing a specialty quality pay-for-performance program to establish clinical, operational, and compliance efficiencies for health plans that will create a game changing experience for patients, pharmacies, and physicians while delivering competitive pricing. We plan to announce this initiative early next year.
What interventions, if any, are utilized to encourage patients to stay on Enbrel? Do you work with any vendors to help?
Our clinical teams work closely with our clients to track adherence across all therapy classes on an ongoing basis. We also have our award-winning Medication Therapy Management (MTM) initiative and programs in place, which look at adherence for high risk patients.
Additionally, we are in the process of ramping up our offerings around the management of specialty patients. Our multi-pronged approach will feature advanced technology, and the eventual development of a quality pay-for-performance program that relies heavily on adherence as a factor to determine success.
I’ve never heard of Abarca. How big are you? Who are your customers?
Abarca was built on the belief that with a smarter technology and a straightforward approach to business, it can provide a better experience and greater value for payers and consumers–and we’ve been delivering on that mission for more than a decade.
As a full-service PBM, Abarca’s clients include self-insured employers, Medicare and commercial plans, and large insurers across the US. We manage more than $2 billion in drug costs for 2.8 million members in commercial, self-insured, Medicare, and Medicaid plans. We also provide Darwin, our advanced technology platform that our team built in-house, to health plans and PBMs.
There have been a lot of companies claiming that they were going to disrupt or revolutionize the PBM industry. Often they use terms like “transparency” to try to differentiate themselves. But they haven’t been very successful. Why would Abarca succeed where others haven’t?
The largest players in the PBM space have found–and maintained–success by adhering to the status quo. Unfortunately, too often those practices favor the company, and not the clients and members they serve. And while some organizations may use the word transparency, we are building relationships with our clients to deliver transparency starting from day one.
For Abarca, transparency means is holding ourselves to a higher standard. It means to be able to look our clients in the eye and tell them “this is exactly what each of your drugs costs and why.” We don’t believe that transparency should be touted as a differentiator, it should be the industry standard.
Our company was founded to throw out the PBM playbook and find a better way in healthcare–and we have structured every aspect of our business in pursuit of that mission.
We have built industry-leading technology from scratch that makes PBM processes integrated, user-friendly, and modern–and has attracted the attention of some of the nation’s leading PBMs. Within a two year period, we will have doubled the size of our team to accommodate our ongoing growth. And, while many PBMs are in the process of debating outcomes based contracts, we’re executing them with some of the nation’s leading pharmaceutical manufacturers.
What other kinds of outcomes based contracts do you have in the pipeline? What kinds of drugs are good candidates?
Abarca will be focusing on high-cost, high-risk specialty medications for our future outcomes-based contracts. Specifically, we’re looking at treatments for multiple sclerosis, rheumatoid arthritis, hypercholesteremia, and breast cancer, among other disease states.
Do pharma companies want to do more of these deals? Why?
The adoption of innovative drug contracts has been slow and steady over the last few years. In fact, a recent report by PhRMA found that the list of publicly announced value-based contracts grew from 39% to 43% during 2018. But, there are several important trends that are emerging that could change healthcare significantly, including pay-for-performance, calls for transparency, and, potentially, moves away from existing rebate models.
Based on these factors, I believe that pharmaceutical companies are increasingly warming to these types of agreements. There is also the added bonus that outcomes-based agreements give drug makers critical, real-world insight into the performance of their products.
In general, pharmacy can be a very slow moving industry. But, those who are willing to innovate on their own accord–rather than industry mandate–will be in a better position for long-term success.
How about payers? What is their motivation?
Payers are really looking forward to the widespread adoption of these agreements, for a few reasons. First, it puts more accountability on manufacturers for the performance of their products. Additionally, it will help to facilitate better fact-based formulary decisions.
Today, there are a number of factors that contribute to whether or not a drug appears on a formulary but, in many cases, the process can be quite opaque. That’s not how important decisions that impact member health should be made. As outcomes-based agreements become commonplace, we will have the data necessary to manage formularies with more transparency, and objectivity. Specifically, the total impact of cost will be easier to manage and decisions can be made based on clinical outcomes, rather than pharmacy-based data points.
Do you expect these outcomes based plans to be emulated by other PBMs? Does Abarca provide technology to other PBMs that will help?
We would hope that these types of agreements become the standard in our market. However, we recognize that not every PBM has the technology necessary to support them.
Along with being a full-service PBM, Abarca provides the technology, analytics, and reporting capabilities for health plans and PBMs to support innovative drug contracting–and other clinical initiatives. It may seem a little counterintuitive to provide what some see as our “secret sauce” to the competition, but we believe that health plans, pharmacists, physicians, and, most importantly, patients deserve a better experience–no matter who their PBM is.