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Managing Uncertainty In Drug Value: Outcomes-Based Contracting Supports Value-Based Pricing

January 30, 2020 / DANIEL S. MYTELKA

Prices for drugs should reflect their value. If price and value become disconnected, efforts to produce new therapies won’t focus on the treatments with the highest net benefit for patients and payers. A challenge arises when the value of a drug is uncertain. Durable drug therapies such as gene therapies have benefits that might last a lifetime, but clinical trial data at launch may be limited with regard to both duration and target population, making it difficult to quantify those long-term benefits. It’s possible to delay launches until more data are available, but this is an inappropriate choice when patients have few other options and the key question is not whether they will benefit from a drug but how much they will benefit. We believe that outcomes-based contracting can address value uncertainty without limiting patient access.