WASHINGTON – U.S. Sens. Mark R. Warner (D-VA), Bill Cassidy (R-LA), Michael Bennet (D-CO), and Todd Young (R-IN), urged the Government Accountability Office (GAO) to look into private sector innovations related to outcome-based arrangements with drug manufacturers to determine how to help lower prescription drug costs for patients, providers, and payers. Over the past decade, the health care sector has begun shifting away from payments for the volume of services and moving towards payments based on value. More data can help lawmakers figure out if this is a principle that can be applied more broadly to better contain prescription drug costs.

“In recent years, numerous private payers have moved towards outcomes-based arrangements with drug manufacturers, but to date federal policymakers have lacked the tools, resources, and information required to understand how such arrangements might be translated into Medicare and other programs,” wrote the Senators in a bipartisan letter to GAO Comptroller General Gene Dodaro.  

Outcome-based arrangements are risk-sharing agreements made between product manufactures and payers that link payment for a drug to patient outcomes, such as clinical measure (e.g., laboratory value) or an event (hospital readmission). Though some product manufacturers and commercial payers have implemented these arrangements in the United States and internationally, the results have been mixed and savings are not definite so more research is needed in this area to determine if this policy would be a viable tool to reduce costs and improve outcomes.

“As our country focuses on advancing a health care system that delivers better care and lowers cost for all Americans, pharmaceuticals should be held to a similar standard of demonstrating real, measurable outcomes to stakeholders,” added the Senators.

The full letter text is below and can be found here.

The Honorable Gene Dodaro
Comptroller General of the United States
441 G Street, NW
Washington, DC  20548

Dear Mr. Dodaro:

The move toward paying for outcomes rather than volume is driving health care industries to rethink traditional business models. The use of bundled payments, accountable care, comparative effectiveness research (CER), and payments linked to performance is the result of regulatory and market pressures to reduce health costs without compromising safety and quality. As our country focuses on advancing a health care system that delivers better care and lowers cost for all Americans, pharmaceuticals should be held to a similar standard of demonstrating real, measurable outcomes to stakeholders.

Our pharmaceutical system, while not perfect, rewards innovation and creates financial incentives for drug developers to take on scientific risk, which has enabled us to cure diseases, improve patient quality of life, and avoid costlier medical treatments. Even so, many of these innovative treatments are growing increasingly out of the reach of patients as costs continues to rise. Both the Medicare Chief Actuary and Congressional Budget Office predict retail drug spending will continue to grow faster than the economy over the next decade. These rising costs squeeze federal, state, and household budgets.

In recent years, numerous private payers have moved towards outcomes-based arrangements with drug manufacturers, but to date federal policymakers have lacked the tools, resources, and information required to understand how such arrangements might be translated into Medicare and other programs. In light of these developments we would like to request that GAO examine the following questions:

1. How are current arrangements structured? In what ways, if any, do current outcomes-based arrangements differ in structure? What variables account for the differences? And at what point are agreements reached?
2. To the extent possible, what process, metrics, and research, if any, do payers and manufacturers use to establish definitions as to when the treatment accomplishes agreed upon outcomes, and when it does not? In what ways, if any, are patient experience and preferences incorporated? And what data, if any, is collected, measured, valued, aggregated, and converted to evaluate whether the metric was achieved?
3. Where is the savings potential for consumers and the government in outcome-based arrangements? What factors, if any, influence the savings potential?  To what extent are savings, if any, passed on to consumers and how?
4. Taking into consideration the models and structures of existing arrangements, are there any “best practices” or lessons that can be replicated by other payers, public and private, and manufacturers?”

We recognize that it may not be possible to answer all these questions, and in such cases would appreciate any analysis concerning what is needed to better evaluate these arrangements and questions. Thank you for your timely attention to this request. If you have any additional questions, please contact our offices.

Sincerely,

Mark R. Warner
United States Senator

Bill Cassidy
United States Senator

Michael F. Bennet
United States Senator

Todd C. Young
United States Senator

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