Can We Ever Agree on Outcomes-Based Agreements?

Published on
November 3, 2023
Written by
Delphic Research
Read time
7 min

On October 12th, Delphic Research’s Jason Grier gave a presentation on the use of Outcomes-Based Agreements to the 22nd Annual Market Access Summit held at the Old Mill Inn in Toronto.  The article below summarizes the key highlights from that presentation.

21 Months

The average time between Health Canada approval (Notice of Compliance) of a new drug to the time it appears on a public formulary somewhere in this country is 21 months, earning Canada the distinction of being one of the slowest in the OECD to publicly reimburse new drugs.  For orphan and rare disease drugs, this number increases to 22 months.

For patients waiting to access a new medicine that could improve their quality of life, even extend their lives, this is concerning. It also has an impact on health system performance, as many new drugs have been shown to demonstrate real benefit in terms of health care utilization, including reduced hospitalization or lengths of stay.

Fortunately, there is a growing recognition that – at least in some cases – new strategies are needed to address the challenge and ensure earlier access for more game-changing therapeutics. While several methods have arisen to overcome these barriers and save lives, one of the most widely discussed methods is Outcomes-Based Agreements. 

Challenge isn’t easy….and it’s taken a leap of faith by both manufacturers and payors alike about the need to work together on behalf of patients who stand to benefit.

Outcomes-Based Agreements are emerging among a set of strategies in which payors and manufacturers have joined together through innovative risk-sharing agreements or contracts to support earlier access to new medicines. Image Source: KPMG

Outcomes-Based Agreements (OBAs) follow a “pay-per-performance" model in which the effective price  of a drug is adjusted, usually on the basis of dynamic rebates and depending on how the drug performs against a series of agreed-upon metrics, monitored against real-world evidence. These might include hospitalization rates, whether a patient responds to a drug, or even whether a patient is able to return to work and normal life.

These strategies are useful in helping to meet the challenge of securing timely access to new medicines for patients against the background of evidence uncertainty relative to value. In circumstances where there is limited data available to provide a high level of confidence around the clinical benefits of a drug (such as where the available data is limited to Phase II studies or in circumstances where even Phase III data may be seen as underpowered due to small patient populations), OBAs have proven particularly useful in helping to overcome these limitations, expediting access.

Outcomes-Based Agreements do require a leap of faith on the part of manufacturers and payors alike but, as awareness and experience with them grows, so does a sense of confidence around the use of these strategies.  Manufacturers believe in using OBAs when the need for a drug that serves a small patient population is extremely high so that the cost accrued is manageable. And while payors welcome the ability to save on the costs of drugs, many feel that rebates are often not enough to offset the high costs of drugs to begin with, both for themselves and patients. However, due to the comparative benefit of cost saving, both public and private payers have started to adopt OBAs.

Stakeholders describe their experiences with OBAs in Canada. Image Source: RWE & OBA Working Group.

OBAs and other similar models of pay-per-performance administration can be found globally. The UK has adopted Managed Access Agreements (MAAs), which are time-limited arrangements for patients to access drugs while further data continues to be collected. Similar models exist in the US private sector, where 58 percent of payers adopted OBAs for prescription drugs. (Source: Avalere)

Despite falling behind other countries, Canada has adopted various measures to incorporate OBAs into the healthcare system. Canada has announced a plan to invest up to $1 billion over two years into a national strategy that includes pay-for-performance models of drug reimbursement.  

Various stakeholders are already beginning to take this leap of faith, according to a 20Sense Report published October 31st, 2023. In September 2023, CADTH introduced a new process for time-limited recommendations. As long as gaps in evidence for a drug can be bridged within three years, recommendations may be issued for drugs with limited but promising evidence, making it easier for patients in need to access drugs faster. This was preceded by the pCPA's Temporary Access Process, in which a public engagement questionnaire was launched in August 2023 to garner feedback regarding similar time-limited agreements. And even in June 2023, INESSS encouraged manufacturers to include “exploratory economic scenarios” in their drug submissions, many of which involved medicines of uncertain value and performance-based agreements. This has even stretched to individual regions of Canada, where New Brunswick’s Horizon Health Network has partnered with manufacturers to develop an “express lane” for those in need of specific lung cancer treatments.

These are encouraging developments as they demonstrate a shared commitment on the part of both industry and payors -- in spite of the economic risk -- to work on the common goal of seeing beneficial medicines reach patients more quickly.

43 Days

It took 43 days from Health Canada for Alberta to make Zolgensma, a ground-breaking innovation for spinal muscular atrophy (SMA) available for public reimbursement on a case-by-case basis. The manufacturer has successfully pursued OBAs like these around the world, working with payers to establish Outcomes-Based Agreements with eligible rebates within a five-year time period.  

Zolgensma is one of seven examples of Outcomes-Based Agreements demonstrated in preliminary findings by the RWE & OBA working gruop in their report on advancing the opportunity for Real-World Evidence and Outcomes-Based Agreements in Canada.

Zolgensma was one of seven examples of Outcomes-Based Agreements investigated by the RWE and OBA working group, specifically in their preliminary findings regarding possible financial models for OBA implementation. Image Source: RWE & OBA Working Group

The RWE and OBA Working Group, Co-chaired by Allison Wills and Arif Mitha, partners at 20SENSE, was launched in 2019 to develop an understanding for the potential of OBAs for the benefit of all stakeholders, ranging from manufacturers and payors to academics and people as a whole. Members of the 2022 group include AbbVie, AstraZeneca, Bayer, BioScript Solutions, Janssen, and Pfizer.

This is important work as, ultimately, Canada needs to step up its game when it comes to expediting access to new medicines that patients are depending on, even in the face of uncertainty with respect to evidence of value.  By continuing efforts to expand the use of OBAs as a strategy to expedite access to medicines in certain circumstances, both patients and health systems stand to benefit from earlier access while, at the same time, payors are able to hedge their risk if the new therapeutics under-perform.

References / Further Reading

Outcomes-Based Agreements in Canada

Pathway to Success in Outcome-Based Contracting

Outcomes-Based Pharmaceutical Contracts: An Answer to High U.S. Drug Spending?

Manufacturers’ views on outcome-based agreements

Real-World Evidence and Outcomes-Based Agreements Working Group 2022 Research and Outputs Executive Summary

The Real-World Evidence and Outcomes-Based Agreements Working Group

20SENSE CADTH Symposium Panel Session

Update on Managed Access and OBAs in Canada

Subscribe to our newsletter

Thanks for joining our newsletter
Oops! Something went wrong while submitting the form.