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30 Health Law. 1 (2017-2018)

handle is hein.journals/healaw30 and id is 1 raw text is: H IEALTH H LAWYER Value-Based Contracting for Prescription Drugs and Medical Devices: An Innovative Solution Impaired by Outdated Regulations............................ 1 Chair's Column...................... 2 A Balancing Act: Alternative Payment Models and Physician Compensation...................... 10 Section News...................... 18 Farm to School and Health Equity: Through a Legal Lens............................ 20 CMS Botches Emergency Room Regulation: How the Two-Midnight Rule and its Audit Process Undercuts Physicians, Patients, and the Medicare Trust Fund .............. 28 Section Calendar.......Back Cover Volume 30, Number 1, October 2017 VALUE-BASED CONTRACTING FOR PRESCRIPTION DRUGS AND MEDICAL DEVICES: AN INNOVATIVE SOLUTION IMPAIRED BY OUTDATED REGULATIONS Barry H. Boise, Esq. Barak A. Bassman, Esq. Mary Margaret Spence, Esq. Hilary LaBar, Esq. Pepper Hamilton LLP Philadelphia, PA Introduction Often lost in the cacophony of headlines surrounding rising healthcare costs is the promise that value-based contracting offers as a possible solution. In contrast to the traditional fee-for- service model, value-based contracting conditions the price of medical goods and services on demonstration of deliv- ered benefit to patients. In recent years, value-based contracting has gained significant traction in the hos- pital and physician setting, and it is beginning to make inroads into the prescription drug and device setting. Advances in technology and big data - a term describing the large volume of data sets produced each day that may be analyzed to reveal patterns, trends and associations - increasingly allow for aligning payment to evi- dence of health outcomes. Payors, government and industry have all endorsed the concept of applying value-based contracting to prescrip- tion drugs and devices. Significant regulatory obstacles, however, stand in the way of fully rec- ognizing the potential for value-based contracting in the prescription drug and device arena. The current federal regulatory scheme for medicines and devices, which was designed around traditional fee-for-services models, is ill-suited to value-based models. This article discusses the potential impedi- ments to value-based contracting for medicines and devices posed by the Medicaid best price rule, the Anti- Kickback Statute (AKS) and regula- tions governing off-label promotion. The services that a drug or device manufacturer may wish to offer in con- nection with a value-based contract raise AKS concerns that may not be present in value-based contracting for physician and hospital services, and Medicaid regulations on the best price for prescription drugs and Food and Drug Administration (FDA) regula- tions on off-label promotion make value-based contracting in the drug and device arena particularly chal- lenging. The complex way in which drugs, in particular, are distributed and reimbursed also raises challenges not continued on page 3

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