Are Value-based Arrangements the Answer We’ve Been Waiting for?

Published

This analysis explored the use of value-based arrangements (VBAs) as a mechanism for cost containment in the United States. VBAs link payment for a biopharmaceutical product to its real-world performance. The authors suggest that as VBAs gain traction with U.S. payers, it is increasingly important to recognize the strengths and limitations associated with these arrangements and to set appropriate expectations for what VBAs can realistically achieve.

The authors posed three key questions to help contextualize the role of VBAs within the U.S. health system’s broader transition to value-based payment. These questions include:

  1. Are there enough drugs that meet the ideal criteria for a VBA (i.e., drugs that are associated with clearly defined outcomes that can be easily captured and reliably measured over a relatively short timeframe. Not all drugs are a good fit for a VBA; if few meet the ideal criteria, the model’s applicability will be inherently limited.)?
  2. Does the share of drugs that meet the ideal criteria for a VBA represent a large enough portion of health care spend to be important?
  3. Are VBAs likely to be structured with enough financial risk to meaningfully affect overall spending?

Upon exploration of these questions, the authors identified inherent limitations associated with the VBA model which may inhibit these arrangements from meaningfully impacting overall health care spending. In light of these limitations, the authors concluded that “VBAs will likely not be a singular solution for improving health care cost containment. Instead, VBAs offer an opportunity for the U.S. health system to achieve higher value for dollars spent when implemented in combination with other value-based payment mechanisms and policies that disincentivize low-value care.”