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s angst mounts over prescription drug costs, a survey finds that most health plans would like to pay for many of the highest-priced medicines based on patient outcomes. The findings suggest that insurers hope to get tougher with drug makers as prescription medicines, by some estimates, account for more than one-fifth of overall health care costs.

In these arrangements, a health plan may get an extra discount from a drug maker if a medicine does not help patients as much as expected, or a drug maker may get a credit toward a rebate provided to a health plan. The survey, released last week, found interest was particularly strong for hepatitis C and oncology drugs, although plans have started to use these arrangements for other types of drugs, as well.

Specifically, the survey found that 63 percent of health plans had strong interest in outcomes-based contracts for hepatitis C treatments, according to Avalere Health, a consulting firm that last year queried 42 US health plans representing 161 million insured people.

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Much of the interest centered on expensive specialty drugs. For instance, 53 percent of plans expressed high or very high interest in contracts for oncology medications, 41 percent said the same thing about rheumatoid arthritis drugs, and 35 percent pointed to multiple sclerosis treatments.

The interest in outcomes-based contracts is “dramatically accelerating right now because the data is available, and it’s getting much easier to track drug performance,” said Dan Mendelson, who heads Avalere Health. “In fact, more plans are starting to demand it.”

And health plans are increasingly able to do so for a couple of reasons — they have access to medical and pharmacy claims data showing drug performance, and there is growing competition in some therapeutic categories. In fact, since the survey was conducted, drug makers have inked value-based contracts for a variety of medicines.

Last week, for instance, Eli Lilly explained to analysts how it receives a rebate credit if its Trulicity diabetes drug outperforms rival medicines, according to Diabetic Investor. The drug maker uses a composite measure that includes HbA1c, which is tracked to provide a window into blood sugar levels, and medication adherence.

In recent months, Novartis struck such a deal for its Entresto heart failure drug, which has a list price in the United States of $12.50 a day, or about $4,560 a patient per year. The drug maker agreed to the arrangement after the medicine failed to catch on with physicians and insurers, partly due to the pricing.

Last month, Cigna reached a deal with the companies that sell a new type of cholesterol treatment called PCSK9 inhibitors. Each treatment – Sanofi and Regeneron sell Praluent, and Amgen markets Repatha – has a list price of about $14,000, although the drug makers have been under pressure to lower the price, especially after the Institute for Clinical and Economic Review questioned the value at that price point.

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The insurer noted it also has value-based contracts covering medicines for heart failure, diabetes, multiple sclerosis, and hepatitis C.

Nonetheless, Avalere noted that wider adoption of outcomes-based contracts will depend on whether both drug makers and health plans can agree on the sources of data used to demonstrate outcomes, as well as the metrics needed to determine whether a drug is having the intended effect on patients.

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  • For many drugs and many conditions tools are available (or will be soon) that can help determine whether a drug is likely to help a patient. Broader use of such tools will reduce the untold millions spent on drugs that have no chance of having a therapeutic effect on the patients for whom they are prescribed. Perhaps an outcomes-based reimbursement scheme will speed the development of these tools.

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