Payers Transitioning to Value-Based Contracting: The Essential Role of Digital Therapeutics in Pharma Differentiation - Wellthy Therapeutics

Payers Transitioning to Value-Based Contracting: The Essential Role of Digital Therapeutics in Pharma Differentiation

 

The life sciences industry is undergoing a major transition, driven by calls for more equitable access to medications and the need for drugs that deliver long-term value. Patients, payers, and legislators alike are pushing for change, signaling the end of the fixed cost-per-unit model and ushering in the era of value-based contracts (VBCs).

With this shift, there’s a heightened demand for deeper insights into patient behaviors and tangible proof of drug efficacy in the form of real-world evidence (RWE). Payers are no longer satisfied with traditional metrics; they want assurance that the drugs they invest in lead to actual health improvements. Nearly 60% of health plan and health system financial executives identify the transition to VBC as a critical priority for the coming years​.[1]

Understanding Payers’ Needs in a Value-Driven Market

Payers, which include insurance companies, government programs, and other entities responsible for reimbursing health care costs, are now prioritizing the long-term value and efficacy of treatments. They need solutions that ensure better health outcomes and justify the economic investment in specific therapies. 

What payers are looking for from life sciences companies?

  • Evidence of Long-Term Value: Payers need to see that a drug continues to perform well outside of the controlled environment of clinical trials, reflecting its true impact on patient health.
  • Assurance of Medication Adherence: They require assurance that patients are adhering to their treatment plans, which is a critical factor in achieving desired outcomes.
  • Data-Driven Insights: Payers seek detailed data that demonstrate how a drug improves patient health, potentially reducing hospital visits and associated healthcare costs.
  • Equitable Access: There’s an increasing focus on ensuring that medications are accessible to all, calling for innovative strategies to balance cost and availability.

This is where digital companions come in — they are the bridge to this new paradigm. 

Digital companions are sophisticated digital tools that accompany a patient through their treatment journey. They are designed to support medication adherence, monitor health outcomes, and provide personalized patient engagement. 

Why the shift to VBCs signals a rising demand for digital companions?

  • Collecting Real-World Evidence: Digital companions are excellent at gathering patient data in real-world settings, offering insights into how a drug performs post-approval. This RWE is crucial for payers who are basing reimbursement decisions on tangible outcomes.
  • Driving Patient Outcomes: By engaging patients consistently, digital companions can improve medication adherence and decrease hospital and emergency department visits. This not only betters patient health but also reduces healthcare costs—a win-win for payers and patients alike.
  • Supporting Value-Based Contracts: As VBCs become more common, life sciences organizations must demonstrate that their drugs deliver on promised outcomes. Digital companions provide the necessary data to support these contracts, improving trust with payers.
  • Enhancing Patient Experience: These tools offer a personalized healthcare experience, which can lead to higher patient satisfaction. Satisfied patients are more likely to follow treatment regimens, which is essential for demonstrating drug value.
  • Cost Savings and ROI: For payers, the long-term cost savings from improved patient management and reduced healthcare utilization are significant. For life sciences companies, the investment in digital companions can lead to substantial financial returns and a competitive edge in the market.

Today, the life sciences industry is at a crossroads. By embracing these digital companions, the industry can ensure they not only meet the current demands for equitable and value-driven care but also establish a competitive edge in the rapidly evolving healthcare market. The commitment to digital companions is not just about innovation; it’s about preparing for a future where patient outcomes and real-world evidence are the currency of healthcare value.

Reference:

  1. https://www2.deloitte.com/us/en/blog/health-care-blog/2021/value-based-contracting-is-gaining-traction-is-medtech-ready.html
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