Why Are Value-Based Contracts Important?


The bio-pharmaceutical industry has long been a driver of medical innovation, and its products have directly benefited millions of patients around the world. Yet patients often face delays in gaining access to new treatments in order to ensure that they are both safe and effective for the broadest patient population. To address this challenge, innovative payment approaches can enable Medicare to cover new treatments in ways that provide better outcomes for patients while also saving taxpayer dollars. To span those objectives, these payment mechanisms – known as Value Based Contracts – can link reimbursement, coverage, or payment to a treatment’s real-world performance.

Value-based Contracts

The process has emerged as an attractive alternative to hiring full-time employees at higher salaries, providing salaries and other benefits to contractors, or outsourcing work to third parties. Value-based contracts are contingent on meeting certain objectives, and can encompass a number of contract types. Value-based contracting typically involves the promise of a performance-based reimbursement or cost-sharing.

Control Health Care Costs

Value-based contracts are one of many innovative methods policymakers can use to better control health care costs and improve patient outcomes in United States, but they aren’t a panacea. A shift to value-based contracts would require widespread changes throughout the continuum of care, and more data will be needed to measure treatment effectiveness before they are widely adopted. These contracts are a positive and innovative solution to the major problems facing the US healthcare system. For patients, value-based contracts can help ensure that they have access to treatment options, as well as improve adherence to treatments. For payers, this model can help drive down costs by ensuring that patients are taking their prescribed course of treatment.

A right contract, wisely negotiated and rigorously adhered to, is an essential part of the platform. That supports a successful commercialization strategy. Whereas contracts often viewed as a limiting document. Which loathed by many in industry and viewed traditionally as a formality for transactional value. VBCs represent the opportunity to make contracts mean more than just the signing of papers.

Performance and Evidence-based

By focusing on a shared value agenda in negotiation and execution. Meaningful agreements can established that enhance patient outcomes and provide better financial returns. Fortunately, technology has emerged rapidly in recent years to facilitate this trend by providing both. The means to benchmark patient performance and evidence-based outcomes data as well as facilitating streamlined contract administration. The time has arrived for health care stakeholders to move forward with VBCs guided with technology at its heart.


Value-based contracting holds a great deal of promise for achieving better health outcomes. Ensuring greater transparency and accountability, and reducing drug costs. However, it is not without its limitations, and there are many important considerations to take into account. When developing and implementing any such contract. Continued industry examination of these initiatives. Including their strengths and weaknesses, will help to ensure that they can achieve their full potential.

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