Lessons for pharmaceutical manufacturers in provider APMs

Pharmaceutical manufacturers are facing increasing pressure over prices and value. The advantages of pharmaceutical alternative payment models (APMs) may be increasingly attractive to both pharmaceutical manufacturers and insurers. But pharmaceutical APMs are more nuanced and resource-intensive than traditional fee-for-service contracts that pharmaceutical manufacturers negotiate with payers.

Whether pharmaceutical APMs succeed or fail will depend on finding solutions to operational and logistical challenges, some of which are unique to the pharmaceutical industry.

Patient attribution is integral to any APM. In pharmaceutical APMs, patient attribution equates to adherence to a particular medication because patients cannot be expected to benefit from a product they do not use. But adherence metrics are imperfect, and the best way to calculate patient adherence differs by medication. There is also often inaccurate information in claims databases, an issue that plagues provider APMs but could be an even bigger challenge for pharmaceutical APMs.

Pharmaceutical APM targets based on real-world experience can be judged by comparing the targets to historical data. By contrast, clinical trial endpoints may not be well-defined in administrative data, so these should be used only after careful testing with real-world data. Otherwise, the real-world outcomes could be far from those expected.

Although sampling is not a common component of pharmaceutical business operations, measurements based on samples could be crucial for some pharmaceutical APMs, especially when it is impractical to obtain full population data.

Managing APM risk requires real-world data analytics to quantify the financial impact of outcomes. Although pharmaceutical manufacturers have expertise in data analytics for clinical trials and outcome research, successfully managing pharmaceutical APMs requires expertise in different quantitative skills—risk/actuarial analytics.

In this article, Milliman’s Maggie Alston and Bruce Pyenson discuss in more detail the valuable lessons for pharmaceutical manufacturers in provider APMs.

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