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Related Experiment Videos

When Do Value-Based Contracts Add Value? Insights From Probabilistic Simulations.

Rebecca K Metcalfe1, Karen Geary2, Mark Trusheim2

  • 1Core Clinical Sciences Inc., Vancouver, BC, Canada; Centre for Advancing Health Outcomes, University of British Columbia, Vancouver, BC, Canada.

Value in Health : the Journal of the International Society for Pharmacoeconomics and Outcomes Research
|March 28, 2025
PubMed
Summary

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This summary is machine-generated.

Probabilistic simulations can simplify value-based contracts by quantifying financial benefits. These simulations help manage risk-sharing complexities between manufacturers and payers for better outcomes.

Area of Science:

  • Health Economics
  • Pharmaceutical Market Access
  • Biostatistics

Background:

  • Value-based contracts (VBCs), or outcomes-based agreements, link reimbursement to patient outcomes, offering risk-sharing between manufacturers and payers.
  • Limited uptake of VBCs is partly attributed to their inherent complexity.
  • Probabilistic simulations offer a novel approach to streamline VBC planning and financial assessment.

Purpose of the Study:

  • To explore the utility of probabilistic simulations in facilitating the planning of value-based contracts.
  • To characterize the net financial benefits of VBCs based on treatment performance, rebate percentages, and patient numbers.
  • To assess how simulation-guided planning can aid in negotiating VBCs.

Main Methods:

  • Simulated single milestone value-based contracts for 15 or 100 patients using 10,000 iterations per scenario.
Keywords:
contract negotiationpharmaceuticalsstatistical simulationvalue-based pricing

Related Experiment Videos

  • Analyzed binary treatment response rates (50%, 75%, 90%) derived from clinical trials of varying sizes (30, 100, 500 patients).
  • Estimated equivalent discount rates and descriptively compared simulation outcomes.

    • Main Results:

    • The range of potential VBC outcomes widens as the size of the informative clinical trial decreases.
    • The number of patients treated, rather than clinical evidence uncertainty, is the primary driver of potential rebate amounts.
    • Simulation results highlight differential risk sharing possibilities between payers and manufacturers.

    Conclusions:

    • Manufacturers can benefit from risk-pooling across multiple VBCs with various payers.
    • VBCs involve complex trade-offs and uncertainties that can be better managed with simulation-guided planning.
    • Simulation tools can quantify financial benefits, aiding negotiation and adoption of VBCs.