PHP346 - THE EVOLUTION FROM INTEREST TO EXECUTION: AN ANALYSIS OF RECENT TRENDS IN OUTCOMES BASED CONTRACTING ACROSS THE US AND EU

Abstract

Outcome Based Contracting (OBC) is growing in frequency and complexity. Simple deals, based on binary objective outcomes, are evolving to span multiple stakeholders and outcomes measures. The recent uptick in OBCs across the US and EU tells a story of how OBCs have evolved over time, and historical drivers/barriers in contract structure indicate where OBCs will go moving forward. We conducted an extensive review of EY’s proprietary OBC Repository along with publicly available information. Analysis of the data was limited to US & EU pharmaceutical schemes with either, Payment by Result, Money Back Guarantee or Conditional Treatment Continuation. Data was segmented across several categories, including: insurance/payer partner, mode of delivery, therapeutic area, contract type, outcomes and cost. Finally, we applied a novel algorithm to Ph2/3 programs with launch dates in 2019-2020, to predict near-term product launches likely targeting an OBC. Our analysis of over 97 unique contracting schemes from 1997-2018, shows the evolution in OBC design and complexity. From 2015-2017, OBCs doubled in the US and increased 5X in Europe. We also noted an acceleration in the time from approval to OBC announcement, with the bulk of contracts executed within the first two years of product launch. The majority of these deals in the US are in CV while in Europe, oncology leads. Additionally, in the US, a greater number of individual insurers are negotiating OBCs. The deals executed in 2018 reflect an evolution in contracting structure, designed to increase transparency, reduce administrative burden, and shift the evidence strategy employed to track outcomes. This research suggests that OBCs will continue to increase both in volume and complexity. There are significant external drivers impacting this evolution, including greater data sharing capability, increasing volume of innovative launches, and openness to payer, manufacturer, and provider collaborations.