For Immediate Release:
Contact: Kelly Broadway, 202-808-8853
Outcomes-Based Arrangements are Key to Lowering Healthcare Costs
Campaign for Transformative Therapies’ new white paper examines OBAs at the state level
Washington, D.C. – The rising cost of healthcare, specifically prescription drugs, has been the target of lawmakers on Capitol Hill. One potential solution gaining steam is outcomes-based arrangements (OBAs) – also called value-based purchasing agreements (VBPs) – which base reimbursement on whether a therapy worked.
Recently, the bipartisan Medicaid VBPs for Patients (MVP) Act (H.R. 2666), sponsored by Representatives Brett Guthrie (R-KY-02) and Anna Eshoo(D-CA-16), was introduced. The bill adds clarity to a Centers for Medicare & Medicaid Services (CMS) rule ensuring that Medicaid enrollees have improved, affordable access to high-cost drugs. At the April 26 House Energy & Commerce Health Subcommittee hearing on “Lowering Unaffordable Costs: Legislative Solutions to Increase Transparency and Competition in Health Care,” CMS Administrator Chiquita Brooks-LaSure said CMS is committed to working on outcomes-based options for Medicaid. At the same hearing Brian Connell, Executive Director of Federal Affairs for the Leukemia and Lymphoma Society testified “value-based agreements have a lot of potential” and that “there should be rewards for innovation and for making a real impact on patient quality.”
A new white paper from the Council for Affordable Health Coverage’s Campaign for Transformative Therapies (CTT), Outcomes-Based Arrangements: Sustainable Financing for Transformative Therapies and a Review of State Activity, examines the current landscape of OBAs among public payers, focuses on lessons learned from existing agreements within state Medicaid programs, and explores the regulatory environment for such arrangements.
“Outcomes-based arrangements are a proven way to combat the high cost of healthcare,” said Sloane Salzburg, Vice President of the Council for Affordable Health Coverage. “They encourage drug makers to put their money with their mouth is and ensure that innovative transformative therapies work. This allows patients the peace of mind that their new high-cost therapies are effective and replace other more costly care.”
At the federal level, the government has taken steps through rulemaking to enable OBAs, but it is the states that are leading the way. States are increasingly considering value-based approaches (VBPs) to both manage costs and improve patient health outcomes. As of March 2023, sixteen states have received approvals from CMS to implement State Plan Amendments (SPAs) enabling them to negotiate VBP contracts with drug manufacturers. Several other states are awaiting approval.
In researching state initiatives around managing prescription drug costs through OBAs, CTT interviewed a subset of states regarding their contracts, lessons learned, and wish lists for future potential contracts. Interviews revealed several recurring themes and challenges, including:
- Data collection and reporting are challenging
- States want more meaningful outcomes to be part of OBAs
- States are interested in pursuing additional OBAs, with caveats
Despite the challenges associated with implementing OBAs, there’s a growing number of states indicating an interest in pursuing OBAs as a method for controlling high drug costs. However, since each state Medicaid program is unique in how they design the drug benefit and have different budget cycles, CTT suggests creating a public database maintained by CMS that lists the various OBAs states have in place. This would provide states with a menu of potential approaches depending on their patient populations and programmatic structures.
“With healthcosts being at the top of the issue list for Congress, now is the time for lawmakers to come together and make it easier at all levels of the government for outcomes-based arrangements to be enacted. There’s no reason to wait; these programs will save lives and money,” said Salzburg.