Learn why traditional contracting may not be enough to address the needs of both payers and pharma manufacturers
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Get a deeper understanding of the changing contracting landscape and to learn ways to leverage innovative approaches to improve the commercial success of your biopharmaceutical products.
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Overview
Launching a new drug often requires a compromise between the manufacturer and payer’s objectives and priorities. While ensuring patient access to new drugs is an objective for both parties, payers also need to make certain that new therapies comply with budgetary constraints and that any associated risks of uncertainty are minimised. In this context, contracting represents mutually valuable agreements that address the needs of both the manufacturer and the payer.
Traditional contracting agreements have focused purely on price negotiations. These simple agreements such as, price discounting/rebates, caps and free goods, in themselves are not novel; however, their combination or inclusion in the context of a more complex agreement can be considered in the design of innovative contracting agreements.
When designing a contract, the aim is to find a cohesive solution that meets the needs of the payer while still achieving manufacturer objectives. Sometimes, “traditional” contracting is not sufficient to achieve this compromise, necessitating the adoption of more advanced, and sometimes complex, innovative contracting agreements.
Broadly speaking, innovative contracts can be classified as:
- Outcomes-based agreements that link the product’s clinical outcomes with price and/or access
- Financially-based agreements that use novel financial mechanisms to manage risk and uncertainty
- Value added services: that leverage technology and broader offerings to support product price and/or access, as a stand-alone agreement or more often in combination with an outcomes- or financially-based agreement
Perceptions of innovative contracting and the use of outcomes-based agreements vary across markets. In Italy, where data collection infrastructure is broadly available, payers are accustomed to outcomes-based contracts. In the US, outcomes-based contracting has been less common, though it is gaining traction and expected to play an increasing role in the future.
Key insights include:
- Current trends and anticipated innovations, including the use of outcomes-based agreements
- Contracting issues you should be considering today to optimise the commercial success of your products
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Michael Pace, MBA
Mike has over 20 years of executive experience with global biopharmaceutical firms and digital health start-up ventures, leading payer and specialty pharmacy account management, market access strategy, contracting and operations, sales and sales training, business and leadership development functions. At EMD Serono, he instituted the outcomes-based contracting effort that led to the first outcomes-based agreement on a specialty medication with a health plan, followed by the first outcomes-based agreement with a pharmacy benefit manager in the United States.
Guy Sherwin
Guy has spent over six years advising on global pricing, market access and commercialisation strategy. Innovative contracting and the use of managed entry agreements to support market access is an area of core competence. He consults with clients across a wide variety of therapeutic areas including cardiovascular disease, oncology, metabolic disorders, ophthalmology, and orphan diseases.
Target audience
This program is intended for professionals from pharmaceutical, biotech, and medical device companies involved in:
- Market Access & Public Affairs
- Strategic Pricing
- Brand & Portfolio
- Commercial Development
- Medical Affairs
- Health Economics & Outcomes Research (HEOR)
- Marketing