Everyone's talking about "value-based" pricing in healthcare these days. In our own Diabetes Community, the volume's increased on this issue as the two largest insulin pump companies have entered into agreements with insurance giant Aetna for so-called "value-based" pricing, aka reliant on outcomes such as A1C measures.

Recently, Medtronic announced a new partnership with Aetna that is now in effect. And on April 1, 2017, Aetna entered into a similar agreement with JnJ/Animas for the OneTouch Vibe and Ping insulin pumps, tying payments to A1C outcomes for now. It's a first-of-its-kind agreement for both diabetes device companies, and both are pretty adamant stating that the deals are aimed at "improving outcomes and reducing healthcare costs."

But just where are we, the people living with diabetes, in all of this?

Inside These Value-Based Deals

We reached out to Aetna, Medtronic and Animas to get answers to some of our most burning questions:

  • What does this mean? First off, they tell us this does NOT impact existing pump patients at all. Rather, the agreements are aimed at both type 1 and type 2s currently on Multiple Daily Injections (MDI) but may be interested in going on insulin pump therapy. Once the patients start pump therapy, the companies will examine blinded data to determine whether they're meeting a particular outcome goal -- A1C, initially -- and if that isn't happening, the pump vendor will be required to pay a rebate back to Aetna for not achieving that outcome. We asked for specific dollar figures, but Aetna and both device makers declined to publicly release that info.
  • Does this go Beyond A1C? As of now, it doesn't. But that may change in the future as this agreement moves forward, with other Quality of Life measures taken into consideration. Medtronic states: "Measuring improvement in A1C is the starting point for phase one of our partnership. This benefits both organizations as we operationalize the data-gathering and analytics tied to the outcomes-based agreement. It will further allow us to become more sophisticated around time in range, hypoglycemic events, patient satisfaction, etc." 
  • Can I be denied coverage or access, or forced to pay higher prices if my A1C doesn't drop to a set level? NO, according to both Aetna and the pump companies. This is not tied to an individual patient or their insurance coverage and access. Medtronic spokeswoman Janet Kim tells us, "If outcomes are not demonstrated per the agreement, Medtronic will issue a rebate payment to Aetna. Patients are not impacted by this agreement – whether through reimbursement amounts, current or future coverage or pricing for pumps."  
  • Does this mean people will be forced to use only Medtronic / Animas devices? No, according to Aetna and Medtronic. This is not an exclusive agreement, as we saw with the UnitedHealthcare-Medtronic deal in May 2016. As we're told, "Aetna members have the option to utilize any insulin pump of their choice – there is no preferred component to this agreement." 
  • How will the outcomes data be collected? Aetna will use HIPAA-compliant practices to analyze its claims data to determine patient outcomes improvements. Aetna will also measure patient satisfaction through member surveys. We pressed for more detail on specific A1C thresholds (like maybe the ADA-recommended 7.0%), but all parties declined to release that information. We also asked if PWDs can opt out of this data-collecting, and Aetna replied, "The data for measuring the success of the pump is aggregated and de-identified, so it is not linked to particular member." So, probably not.
  • Does the PWD get anything from this? Echoing the point about no individual impact, the answer is no. And by extension, we'd assume there are no plans to offer discounts or reduced premiums to the patients using these devices and doing all the work to reduce their A1C. 

Generally, "lower overall healthcare costs" don't actually translate to any tangible gain for individual patients, and this is no exception. But Aetna spokeswoman Anjanette Coplin explains there are no negative impacts either.

"This arrangement does not create any financial or logistical barriers to accessing any clinically appropriate therapeutic options. Our members will continue to have unfettered access to the medical device that their clinician deems most beneficial for their care – there will be no cost differential for patients based on their clinician’s choice of insulin pump," she says.

As of now, Medtronic and Animas are the only two pump companies that have made these deals with Aetna, though the insurer says it's always open to further such arrangements.

And it goes beyond devices into medications such as insulin as well. Insurance giant Anthem entered into an agreement with Lilly Diabetes in early 2016 for this so-called value-based pricing, and it's becoming a common occurrence across the board in all areas of healthcare. Other insurers, drug companies and middle-men Pharmacy Benefit Managers (PBMs) are venturing into this territory more often, especially as the heat's risen on the drug pricing problem in our country.

Clearly, this is a pattern that's going big.

Is Outcomes-Based Pricing Good or Bad?

It certainly appears that value-based (or "outcomes-based") pricing is aimed squarely at getting the Pharma/medical device industry to focus on actual improvements in patient health.

But there's a plethora of information being published on this topic, on both sides of the argument. A few standout items include:

  • Modern Healthcare recently examined the trend, jumping off from a discussion by Pharma execs about how value-based pricing is a key to solving the U.S. healthcare cost problem.
  • The New England Journal of Medicine's Catalyst publication ran an article in September 2016 on this topic, looking at how Pharma and healthcare providers could participate in this system.
  • In a recent US News report, value-based pricing is described as a "gateway to extraordinary and excessive profits" for Pharma that could actually lead to higher insurance premiums and even impact diabetes cure R&D by these Pharma companies.
  • The World Health Organization (WHO) issued a statement in May 2017 opposing value-based pricing. Specifically, WHO's assistant director of general health systems and innovation said, "How much is life's value? This structure is good for luxury goods because you have a choice... if I’m sick with cancer, what’s the choice? We think value-based pricing is not feasible for products that are indispensable."

None of this makes it easy for people living with serious health conditions, like diabetes, to gauge whether or how we should be fighting this new model.

The JDRF Says...

While the JDRF has been busy tackling insurance coverage gaps recently with its latest #Coverage2Control campaign, we talked with the org’s Senior Health Policy Director Jesse Bushman about how they view value-based pricing.

“As to how insurers and manufacturers set up their reimbursement models, we’re kind of agnostic to how they do that,” he said. “Our goal is to make sure payers cover a broader array of products and don’t limit choice, and to get these (products) into the hands of patients.”

Ideally, the vision is to support an environment where innovation and competition is fostered between manufacturers, he added.

Bushman says in light of the recent Aetna agreements on insulin pumps, the nonprofit has reached out to the health insurance company to learn more on potential impact on coverage and device choice. They have a meeting setup in early July.

In fact, JDRF has been meeting with many major health plans – six to date, and more are scheduled – to discuss these potential barriers to open access, and to show data on how insulin pumps and CGMs help improve outcomes for PWDs. He says one key will be the Consensus Statement that JDRF signed onto with other diabetes groups, encouraging payers to look "Beyond A1C" when considering outcomes -- mainly to preserve broad access and affordability.

“In our conversations with these health plans, we’re at least seeing that they are willing to give us a door in to discuss this,” Bushman said. “As we see this evolve, we want to keep those conversations going.”

Valuing Human Lives

As patients, we can't help feeling suspicious that these are just more backroom deals being played off as "patient-centric," but that fail to bring us patients into the conversation. On top of that, it feels like this whole focus on "value" can potentially be used against us. It's a slippery slope.

Consider:As recently this past Spring, as Lilly was announcing a distasteful and upsetting insulin price increase, one Pharma exec went on national TV and said that when considering prices for medications such as insulin, "the value they bring to patients and the healthcare system" is taken into account.

Some believe he may have been implying that manufacturers can easily charge more for "high-value" medications like insulin that are necessary for survival, because its customers have no choice.

YIKES!

See also from above: The World Health Organization saying, "We think value-based pricing is not feasible for products that are indispensable."

We hate to sound like a broken record, but without full transparency on these agreements, patients will continue to get the short end of the stick, because we don't even know where to direct any protest that may be in order.

So again, our plea to health plans and D-Industry folk: Give us access to all the pertinent info. Tell us the full net prices and rebate details, and definitely let us in on the actual A1C numbers and other outcomes measures you're using to make these decisions!

Seriously, these moves impact millions of human lives! So let's work together to flip the notion of #ProfitsOverPatients!