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Deloitte's Life Sciences & Health Care Blog

Demonstrating and rewarding value in health care

The growing importance of real world evidence and value-based contracting programs

As the cost of health care continues to rise, life sciences companies are facing mounting pricing pressure and a growing need to continuously demonstrate the value of their products in a real-world population. These market forces are driving more and more life sciences companies to invest in new capabilities with the goal of harnessing the power of real world data (RWD) and changing how value is both demonstrated and rewarded.

Real world evidence (RWE) is evidence generated outside of a controlled clinical trial setting about a product’s usage, potential benefits, and risks. What makes it so valuable is that it is based on the analysis of RWD that is captured within the health care system itself. Sources of these data can include electronic medical records (EMR), health insurance claims, genomics, and data from health apps, wearables, and other biometric devices.

According to Deloitte’s 2018 RWE Benchmarking Survey, most surveyed biopharma companies have established or are investing in building enterprise capabilities to use RWE across the entire product lifecycle, from R&D through commercialization. Using RWE to support commercial use cases, such as market access, is not new. What is new is the heightened focus on market access and the interest in using RWE to design and support new, innovative value-based contracting (VBC) programs.

The survey found that 14 out of 15 biopharma companies that had knowledge of their VBC efforts are actively discussing, piloting and/or implementing value-based contracts. These contracts tie the reimbursement of a product or drug to the value or outcomes they deliver in a real-world population. Despite the growing interest in these programs, there are strategic and operational barriers that exist today that are preventing wide spread adoption of VBCs. Survey participants cited the top three barriers as collecting, linking, and analyzing the necessary patient data; gaining alignment on the contract structure; and assigning how value is measured.

Breaking through the data barrier will require new capabilities and collaboration
RWE will play a critical role in the design and implementation of value-based contracts. It can help identify where value exists in the health care system, provide critical inputs into VBC design to ensure there is alignment of risk from all sides, and track the patient outcomes that will be used to adjudicate the arrangement.

Many organizations lack the necessary infrastructure and resources to efficiently collect, link, and analyze the necessary patient data to support VBCs. This hurdle can make the implementation of the VBC too labor-intensive or lead to contract designs that are based on “what can we measure” instead of “what should we measure.”

To achieve the necessary data infrastructure to overcome this industry-wide challenge, there is an opportunity for stakeholders from across the health care industry to come together to develop a shared utility-like platform that can drive the necessary efficiencies and economies of scale to support VBCs. The advances in cloud-based technology, automation, analytics, and security make it possible to create a trusted, secure environment to design and implement VBCs. It can also bring transparency and objectivity into the programs and help break through barriers that exist today—especially around managing and analyzing complex real-world data sources.

In order to make meaningful progress on value-based contracting programs, providers, patient organizations, payers, and life sciences companies should collaborate to build the necessary capabilities, standards, and technology that will accelerate the shift to these new models. Doing so will help control costs, create access to care, and improve patient outcomes.

Author bio

Jeff Morgan is a managing director in Deloitte Consulting LLP and a member of the leadership team of ConvergeHEALTH by Deloitte. Jeff develops and delivers solutions to the life science industry, focusing on helping life sciences companies to effectively leverage real-world data broadly across their enterprises, from R&D through commercialization.