News & Commentary

Drug Contracts Gauge Value and Outcomes

High drug costs are a cause célèbre. Executives at Harvard Pilgrim Health Care have responded with value-based contracts for two expensive medications, etanercept (Enbrel) and teriparatide (Forteo).

Enbrel treats autoimmune diseases, most often moderate-to-severe cases of rheumatoid arthritis. Under the two-year contract signed in late February with Amgen, Harvard Pilgrim’s payment for the drug will depend on six effectiveness criteria, including patient adherence, switching or adding drugs, steroid interventions, and dose escalation. “If patient scores are below a specified level, Harvard Pilgrim will pay less for Enbrel because its real-life effectiveness will have been lower,” the insurer said in a news release. Harvard Pilgrim is touting this as the only outcomes-based contract for a rheumatoid arthritis drug between an insurer and the drugmaker.

Michael Sherman, MD, Harvard Pilgrim’s chief medical officer, said in the news release that “real world performance of new medicines frequently differs from the well-controlled clinical trial setting and we know that historically, only about a third of patients on Enbrel and others in this class meet all six criteria. By linking the ultimate cost of this drug to its real-world clinical efficacy, this agreement truly puts patients at the center of focus.”

Measuring adherence is a key component of the contract Harvard Pilgrim signed with Eli Lilly (also in late February) for Forteo, a medication used to treat people who are at an elevated risk for fractures. Forteo is administered via self-injection every day for 24 months, and inconsistent administration can reduce its effectiveness.

The contract uses the baseline level of use among Harvard Pilgrim beneficiaries and then tracks improvement. If a certain level of adherence isn’t reached, then Eli Lilly will cut the cost of the drug for Harvard Pilgrim.

Sherman noted in a news release that for Forteo to be most effective, patients need to take it daily for two years. “Greater adherence makes for a more effective treatment for osteoporosis, and by effectively reducing the unit cost of the drug in return for regular use, Eli Lilly is improving the value proposition of its therapy, which matters to all of our stakeholders.”


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