Roadmap to Navigating Value-Based Contracting Models in Cell Therapy

Cell therapy has emerged as a promising treatment option for various diseases, including cancer, autoimmune disorders, and genetic disorders. However, the high cost of these therapies has become a major concern for patients, payers, and pharmaceutical manufacturers. Value-based contracting models have been proposed as a potential solution to address this issue. In this article, I will discuss different value-based contracting models in cell therapy, the tradeoffs between each option, and provide a high-level suggestive roadmap on how to select the best option for both pharmaceutical manufacturers and managed care organizations.

Value-based contracting models in cell therapy

Value-based contracting is a reimbursement model that ties the price of a drug or therapy to its performance in real-world settings. In cell therapy, this means that the price of the therapy is tied to its ability to improve patient outcomes. There are several different value-based contracting models in cell therapy, including:

• Outcomes-based contracting: This model ties the price of the therapy to specific outcomes, such as overall survival or disease progression. Under this model, the pharmaceutical manufacturer and the managed care organization agree on a specific outcome, and the price of the therapy is adjusted based on whether or not that outcome is achieved.
• Risk-sharing contracting: This model shares the risk of the therapy's performance between the pharmaceutical manufacturer and the managed care organization. Under this model, the pharmaceutical manufacturer agrees to provide the therapy at a reduced price, and the managed care organization agrees to pay a higher price if the therapy is successful. If the therapy is not successful, the managed care organization pays a lower price.
• Capitation-based contracting: This model pays a fixed amount per patient per month for the cell therapy. The managed care organization pays the pharmaceutical manufacturer a fixed amount for each patient that receives the therapy, regardless of whether or not the therapy is successful.

Tradeoffs between each option

Each of these value-based contracting models has its own tradeoffs. Outcomes-based contracting can be challenging to implement because it requires a clear definition of what constitutes a successful outcome. Additionally, outcomes-based contracting may not be suitable for all types of cell therapies, as some therapies may have long-term benefits that are difficult to measure.

Risk-sharing contracting can be beneficial because it shares the risk of the therapy's performance between the pharmaceutical manufacturer and the managed care organization. However, this model can be complex to implement, and it requires a significant amount of trust between the parties.

Capitation-based contracting can be straightforward to implement, but it may not be appropriate for all cell therapies. This model may not be suitable for cell therapies that have a high cost per patient or that require significant follow-up care.

Selecting the best option for both pharmaceutical manufacturers and managed care organizations 

Selecting the best value-based contracting model for cell therapy requires careful consideration of several factors. The first factor to consider is the type of cell therapy being used. Some cell therapies may be better suited for outcomes-based contracting, while others may be better suited for risk-sharing or capitation-based contracting.

Another factor to consider is the expected patient outcomes. If the therapy is expected to have a high success rate, then outcomes-based or risk-sharing contracting may be the best option. If the therapy is expected to have a lower success rate, then capitation-based contracting may be more appropriate.

Finally, both parties should consider the administrative burden of each model. Outcomes-based and risk-sharing contracting models require significant administrative resources, while capitation-based contracting may be more straightforward to implement.

The best value-based contracting option for a particular cell therapy will depend on various factors, including the therapy's benefits, patient population, and potential outcomes, as well as the needs and preferences of both the pharmaceutical manufacturer and the managed care organization or payer.

Lead the Charge with CustomerInsights.ai's PLAaaS, the Key to Driving Innovation, Boosting Commercial Outcomes, and Cutting Operational Costs. Feel free to drop me a note, rafi.vartanian@customerinsights.ai to learn more about how our AI based technology and experts can help. If you enjoyed this article, subscribe to this newsletter and follow me on LinkedIn.

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