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30 Health Law. 1 (2017-2018)

handle is hein.journals/healaw30 and id is 1 raw text is: 




















  IN   TH IS IS.SUEF

Value-Based Contracting
for Prescription Drugs and
Medical Devices: An Innovative
Solution impaired by Outdated
Regulations. .. ...........................  1

Chair's Column2........................

A Balancing Act: Alternative
Payment Models and Physician
Compensation     .. . .. 10

Section News S.........................

Farm to School and Health
Equity: Through a
Legal Lens ..............................  20

CMS  Botches Emergency
Room Regulation: How the
Tivo-Midnight Rule and its
Audit Process Undercuts
Physicians, Patients, and the
Medicare Trust Fund .............. 2

Section Calendar.......Back Cover


VALUE-BASED CONTRACTING FOR

PRESCRIPTION DRUGS AND MEDICAL

DEVICES: AN INNOVATIVE SOLUTION

IMPAIRED BY OUTDATED REGULATIONS


Barry H. Boise, Esq.
Barak A. Bassman, Esc.
Mary Margaret Spence, Esq.
Hilary LaBar, Esq.
Pepper Hamilton LLP
Philadelphia, PA


Introduction

    Often lost in the cacophony of
headlines surrounding rising healithcare
costs is the promise that value-based
contracting offers as a possible soIlItion.
In contrast to the traditional f--or-
service miodel, value--based contracting
conditions the price of medical goods
and services on demnonstration 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 describine the large volume
o  data se's 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,
gove rnment and industry have all
endorsed the concept  of applying


Volume 30, Number 1,
October 2017


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
regul aory 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 Stature (AKS) and regula-
tions governing off-label promotion.
The  services that a drug or device
manufacturer may wish to offer in con-
nect ion 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 Admiristration (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
                   coiniiued or. page 3


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