Laying the groundwork for value based healthcare in Europe

Most healthcare systems are battling with the challenge of delivering both better patient outcomes – in an environment of increasing prevalence of diseases – whilst managing escalating costs.1 So how can we ensure the best possible care and access to innovation for patients, while being mindful of these costs and healthcare budget pressures? After all, diseases such as cancer are predicted to increase from 15 million in 2015 to 22 million in 2030.2

In the past decade, the introduction of Health Technology Assessments (HTA), and the impact of austerity measures, have started to address standards of care and budget pressures respectively (see figure 1).3,4 However, the value created by services and more holistic solutions are often overlooked in the healthcare delivery equation.

A Deloitte analysis (2016) showed that solutions combining new drugs, devices, processes and digital platforms (e.g. patient portals, registries), are more likely to improve performance and reduce costs than medical innovations alone. Yet, the impact of the treatment, interventions and patient experience of a medicine are typically not assessed in a robust way. They are also not usually considered as a key performance indictor when contracting or selecting a supplier.

Overview of current measures used to maximise healthcare value

Healthcare measures are often standalone, consequently failing to optimise both care and value for money.5   However, new thinking and public interest in relation to the value of paying for innovative pharmaceuticals has recently been sparked. For example, GlaxoSmithKline’s gene therapy has been priced at over half a million USD, but with money back guaranteed if it is ineffective.6  Novartis has recently entered performance-based agreements with two insurers (New Aetna and Cigna) for testing the ability of its heart failure therapy Entresto to cut down on hospitalizations and improve real world patient outcomes. 7

The recognition of the need to adopt a more value based care approach (VBC) to healthcare is escalating. It has even led to a panel discussion among Life Sciences leaders at this year’s World Economic Forum in Davos. The wide-spread adoption of this concept is seen as increasingly likely, but much more needs to be done.8

VBC aims at shifting payment and reimbursement models from volume to agreed measures of value delivered to patients. The concept of value captures evidence-based clinical, social and economic benefits. VBC can be deployed at the ward, hospital or even national level, and the journey can be structured into four action steps (see figure 2).

The Value Based Care (VBC) journey

VBC is being tested successfully in a real world environment, but only in small scale experiments. For example, three years after their introduction in Stockholm, bundled payments for hip and knee replacements led to a 26 per cent reduction of complication risks and 20 per cent reduction of costs, whilst significantly decreasing waiting times and resource utilisation.9

Based on an assessment of successful and aborted trials, we believe that there are five design principles to ensure a successful VBC pilot:

  1. Establish clear collaboration between stakeholders (innovator, care giver and the payer) with defined goals and roles.
  2. Define outcome indicators with clear target definitions (based on clinical end points, economic and social outcome) and measurement methodologies for the therapeutic area.
  3. Establish simple and viable value-based procurement models.
  4. Ensure that stakeholders are incentivised, in order for lasting adoption of new ways of working. These include tracking and reporting of health indicators and regular analysis of patient outcomes.10
  5. Design detailed operating models from the start, ensuring comprehensive testing and the ability to scale up.

VBC remains a challenging transformational journey, paved with complexity, potential high costs, implementation risks and a cultural change for all stakeholders engaged. But success is possible. For example, Sweden has managed to develop value-based reimbursement and monitoring systems for 70 per cent of the population in eight therapeutic areas.11 Therefore, based on the motto of “thinking big and starting small”, payers and suppliers can initiate pilots starting with budget impact models, in order to estimate the potential value for patients and society of VBC.

As published in SCRIP February 2017

1 Facing the tidal wave: De-risking pharma and creating value for patients, Deloitte, November 2016.
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2 Estimated Cancer Incidence, Mortality and Prevalence Worldwide in 2012, Globocan, 2012.
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3 Introduction to HTA, EURORDIS Rare Diseases Europe, 2016.
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4 Impact of austerity on European pharmaceutical policy and pricing: Staying competitive in a challenging environment, Deloitte, 2013.
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5 Porter, M.E. What is value in health care?. N. Engl. J. Med. 2010;363:2477–2481.
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6 Does the EU price of Stimvelis create a new “glass ceiling”?, groupH, 2016.
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7 Value-Based Drug Pricing Gets Push With New Aetna, Cigna Deals for Entresto, Aishealth, 2016.
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8 Feel Better or Your Money Back, World Economic Forum Annual Meeting, 2017.
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9 Value based reimbursement and initiatives in Sweden, Jonas Wohlin, 2014.
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10 Value-based healthcare in the UK: A system of trial and error, The Economist Intelligence Unit, 2016.
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11 Value based reimbursement and initiatives in Sweden, IVBAR, Jonas Wohlin, 2014.
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