US Payer Perspectives on the Value of Medicines: Are there Learnings from Other Markets?


Balancing access for innovative and transformative medicines with rising healthcare costs is a paramount challenge for the US healthcare system. What can the US learn from other markets around the world to manage costs while maintaining prioritization by manufacturers and speed to access to innovative medicines?

Priority access to innovative medicines has clearly benefited the US​

For example, the 5-year net survival for most cancers in the US remains among the highest in the world

Average Time (weeks) to Market Post Regulatory Approval


weeks | US


weeks | Germany


weeks | UK


weeks | Italy


weeks | France

Allemani C, Matsuda T, Di Carlo V, et al. Global surveillance of trends in cancer survival 2000-14 (CONCORD-3): analysis of individual records for 37 513 025 patients diagnosed with one of 18 cancers from 322 population-based registries in 71 countries. Lancet. 2018 Mar 17;391(10125):1023-1075. Mycka J, Dellamano R, Lobb W, Dalal N, Dellamano L, Pereira E, Mora M Pellere D. Market access trends across the EU5 and US: 2009 to 2016 – An update. Poster presented at ISPOR 20th Annual European Congress. Glasgow; Nov 2017.

In a recent manuscript, Brogan et al. sought to understand how US payers determine value for medicines and how this landscape could be shaped and changed over the coming decade by new ideas and influences from other countries.

Various mechanisms to control costs are employed by US payers but extensive concepts of value seem far-fetched and difficult to operationalize.  Payers across the US feel pressured to cover an FDA-approved treatment, regardless of cost or value, if no therapeutic alternative is available.  This ties payers’ hands with what can be done to achieve value.

Rather than comprehensive views of value, US payers are left with one-off cost control measures that include:

  • Not covering treatments that are not medically necessary
  • Limiting use of higher-priced medicines by placement in a higher tier with higher copay
  • Step therapy (i.e., requiring a patient to fail on 1 or more less expensive treatments)
  • Prior authorization
  • Preferred products (i.e., competitive contracting with specific manufacturers for preferred or exclusive status within the health plan, particularly for those treatments in an existing crowded market).

Over past few years, several organizations have introduced value assessment frameworks in order to promote value-based decision making in the US.  These value assessment frameworks have varying degrees of rigor, transparency, and perspective with the Institute for Clinical and Economic Review (ICER) receiving the most attention.

The US spent 2X the OECD* average on healthcare​

OECD Health Statistics 2019.  OECD Health at a Glance 2019. Avaliable at: (Accessed on May 11, 2020).

Outcomes-based contracting is another tool that has received considerable attention over the last 5 years. Despite this attention, U.S. payers struggle with outcomes-based contracting as a broadly applicable solution, while acknowledging some usefulness in select circumstances where a high-priced treatment has a readily measurable outcome.  There is also a dearth of demonstrated savings from outcomes-based contracting in the US and Europe.  The lack of proven savings coupled with the operational burden imposed on health plans and healthcare professionals make outcomes-based contracting a niche solution.

Could the US learn from other markets? US payers were largely open to learning from other health care systems, where government-enabled healthcare bodies have more tools at their disposal for achieving value.

Price-volume Agreements

Italy and France have effectively used price-volume agreements to manage pharmaceutical costs and achieve value by requiring manufacturers to pay back portions of revenue that exceeds budget impact estimates. Payers in these countries noted that price-volume agreements are the only confirmed mechanism to save money over time. These price-volume agreements are typically negotiated privately with little transparency about the details and savings available for public discourse.

Outcomes-based Contracting

Italy is also a case study in outcomes-based contracting. Italy has implemented more than 50 national outcomes-based contracts with pharmaceutical manufacturers since 2008, but these collectively account for less than 1% of the Italian Medicines Agency’s total spending on pharmaceuticals between 2013 and 2016 and have not been a significant source of savings.


The United Kingdom is well-known for its strict cost-effectiveness thresholds that have been used effectively to control costs by denying reimbursement of treatments that are priced too high. Australia, Canada, France, and Italy also consider demonstration of cost-effectiveness of new treatments to be a pivotal part of the decision-making process.

Comparative Effectiveness

Germany takes a different approach, requiring new treatment to show improved mortality, morbidity, quality of life, or safety compared with a previously approved medicine. Several US payers considered requiring active comparators and a focus on outcomes measures as a viable approach to truly achieving value in the US.

US payers would like to understand the value of new medicines but cannot do it by themselves. Partnership with manufacturers and CMS to adopt value standards for new medicines would go a long way in the efficient use of healthcare resources while continuing to reward innovation.

Brogan AP, Hogue SL, Vekaria RM, Reynolds I, Coukell A. Understanding payer perspectives on value in the use of pharmaceuticals in the United States. J Manag Care Spec Pharm. 2019;25(12):1319–1327. 

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