Value Based Pricing | Tech Mahindra

Value Based Pricing

Towards Affordable and Accessible Healthcare

The healthcare industry has been clenched in the whirlwind of high cost for the longest of time. While different stakeholders have different reasons to be caught in this battle, pharma enterprises are stuck because of the rise in the price of new drugs. To combat the same, the industry has decided to adopt, Outcome-Based Agreements(OBAs), where one pays for the result, that is, to pay for providing the right treatment solution. The outcomes-based agreements (OBAs) encourage the stakeholders to participate in different risk-based arrangements, pushing innovation while focusing on patient clinical outcomes. While the adoption of the model requires in-depth analysis, guidance, it boosts research and development for high-end drugs. The overall goal is to provide appropriate, affordable, and accessible care.

Establishing any new model involves some new, unheard challenges. On the ground level, some of the challenges are legal and regulatory issues, and unmet trust and clash between the stakeholders. Before the implementation of an OBA, the stakeholders, in this case, payers and pharma organizations, need to see each other as equals and make further arrangements. Another key challenge in implementing an OBA is defining and measuring clinical outcomes; even if the clinical outcomes are defined, there are many manual processes involved in studying and identifying the data sets of a certain clinical outcome.

Strategies to address these challenges:

The efforts are underway to establish the right kind of OBAs. The demand is for a model that simplifies the work stream, increases accuracy, reduces manual efforts, and helps with better pricing with the payer. Tech Mahindra’s Outcome-Based Pricing Model is built on the same lines. The model uses Natural Language Processing (NLP) to extract clinical data sets for Outcome-Based Agreements (OBAs) for various molecules, based on the defined clinical outcomes and uses Machine Learning (ML) to manage those outcomes. The solution covers four components, that are, molecules, patients, contracts, and execution. Some of the key highlights of the offering are - contract template specific to a drug with terms and conditions, a patient-specific contract document with endpoints to be measured, well-defined success criteria for endpoints and datasets to be measured, clinical evaluation reports, medical ontologies & clinical studies and much more. The solution aligns the value of the product with the pricing of the product, making way for the innovative pricing models.

Any new offering comes with challenges and requires a strong commitment from the stakeholders. While the offering is in its early stage, OBAs promises to generate savings and invite innovation in the ecosystem. Outcome-based pricing will continue to play an important role in containing healthcare costs and instead of being just suppliers, drug companies can become a more integral part of care pathways by benchmarking outcomes for different providers and sharing data on treatment regimes. Spreading better practices in this way would yield better outcomes at optimal cost, thus enhancing value for patients and the entire health system.

About the Author
Leadership Man placeholder
Venugopal Reddy Kandimalla
Senior VP, Global Head, Healthcare Life Sciences, Tech Mahindra