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Value-Based Arrangements

We are living in a Golden Age of medicines and discovering more drugs that help people live longer, healthier, more active lives. However, rising costs and chronic disease rates place significant pressure on patients and the health care system.

We know we need a solution to this problem, and we're working with other health care stakeholders to explore new ways to ease cost burdens and to deliver better health outcomes for patients.

One of these solutions is implementing value-based payment arrangements. Value-based arrangements ultimately aim to help patients get affordable access to the medicines they need. Unlike the traditional fee-for-service model, which bases payment strictly on the number of products sold, value-based arrangements link reimbursement to specific health outcomes.

For example, if a medicine shows certain clinical results, such as a specific measure via a lab test or a decrease in symptoms, then the biopharmaceutical company pays a smaller rebate, or discount, to health insurers. If the medicine doesn't work as effectively as the biopharmaceutical company believed it would, then they pay more money to the health insurer.

Value-based arrangements provide a number of benefits:

  • Patients get the medicines that deliver the best outcomes for their specific health needs. Medicines in value-based arrangements are generally made available based on how well they work in specific patient subpopulations. So patients can get care that is more personalized and, possibly, enjoy reduced cost-sharing.
  • Pharmaceutical innovators learn how medicines work in real-world patient experiences, which helps them develop future treatments for breakthrough discoveries.
  • When patients take the most effective medicines, it keeps them healthier and out of the hospital, which saves health insurers money.

Value-based arrangements for medicines are still relatively new, but in order to better facilitate these arrangements, we need to update and improve outdated and unclear laws and regulations. Lilly is dedicated to helping address these barriers and champion more value-based arrangements.

Lilly & Anthem Find Common Ground in Value-Based Pricing

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We are living in an era of life-changing medicines, as stakeholders throughout the industry explore innovative solutions to improve patient outcomes. Across the country, value-based care is replacing fee-for-service models that have long been the standard. And today, Lilly and Anthem are teaming up to bring that same emphasis on value to conversations on the price of medicine.

While pharmaceutical companies and insurance providers often find themselves on opposite sides of the table, the newly announced partnership between Lilly and Anthem underscores our mutual commitment to putting patient outcomes first. We believe this important move is a natural extension of the transition toward value over volume in health care, and has the potential to foster the discovery of new therapies that improve people’s health.

As we work toward value-based pricing, we know we must overcome barriers and introduce new approaches, such as overhauling existing laws that bar manufacturers from discussing medicines before approval. While intended as a safeguard to prevent  marketing of a medicine prior to FDA approval, this provision obstructs important channels of communication that help developers and health plans prepare for a medicine’s release. Moreover, regulations designed to prohibit improper kickbacks for health insurers often have the effect of restricting partnerships between insurers and pharmaceutical companies that could provide people with better treatment.

Addressing these challenges requires a multifaceted, innovative approach, which is exactly what Lilly and Anthem are putting forward. First, federal law must evolve to enable manufacturers to speak openly and transparently with health plans about new therapies in the approval process. Second, we must cultivate an environment that encourages health plan providers and drug developers to partner. Doing so will align coverage decisions and rate development, promoting greater access to high-value care.

There is no cure-all to eliminate the barriers to progress, but these first steps will put us on a path to broadening patients’ access to the cutting-edge medicines of today and breakthrough treatments of tomorrow. With Lilly and Anthem leading the way, that path may be shorter than you’d expect.

To learn more about this collaboration, you can read the recently published op-ed by David Ricks and Dr. Samuel Nussbaum in Health Affairs, or review our white papers detailing this new initiative.