Effective Value-based Contracting in Life Sciences

Value-based contracts are innovative agreements among life sciences firms, healthcare payers, and healthcare providers in which the cost of a therapy – whether a drug or a medical device – is decided based on the health outcomes from that therapy, rather than the volume of drugs/devices consumed. Such contracts have come into prominence in the US over the last five to eight years, with payers, patient groups, and governments increasingly urging drug and device manufacturers to demonstrate value from their offerings.

This viewpoint examines the emergence of value-based contracting in the life sciences industry, the role technology can play in enabling such contracts, and what life sciences firms can do to prepare for effective value-based contracting.