Eli Lilly & Co.’s novel performance-based contract with Harvard Pilgrim Health Care for Trulicity (dulaglutide) ties price rebates to how well the GLP-1 agonist performs in reducing A1C blood sugar levels versus other drugs in its class.

Trulicity will be compared to Novo Nordisk AS’s Victoza (liraglutide), AstraZeneca PLC’s Byetta (exenatide) and Bydureon (long-acting exenatide), and GlaxoSmithKline PLC’s Tanzeum (albiglutide).

Announced by Harvard Pilgrim June 27, the arrangement gives Trulicity preferred status on the payer’s formularies along with the other four GLP-1 agonists, in return for a base rebate. Preferred status means that members using the drug face lower cost sharing than they would if the drug was non-preferred.

The contract also stipulates that Harvard Pilgrim will pay a lower net cost (by getting an additional rebate) for the drug if fewer of its members who are taking Trulicity reach the agreed-upon endpoint of A1C of less than 8%, compared to individuals taking the other GLP-1 agonists. Lilly will get a higher net price for its drug if patients taking Trulicity do better than patients taking the competing drugs.

Members monitored as part of the contract will be on GLP-1 treatment for at least six months. Harvard Pilgrim will collect the data on A1C levels – which Lilly would be free to audit, Harvard Pilgrim Chief Medical Officer Michael Sherman said in an interview.

The contract will run for two years and is in effect for Harvard Pilgrim members covered by the payer’s open and closed formulary programs, Sherman explained.

This is not the first outcomes-based contract Lilly has tried for Trulicity, according to a company spokesman (although Lilly will not disclose what payer it worked with previously) so the firm is going into the Harvard Pilgrim deal with some experience in contracting for Trulicity based on outcomes.

US Lilly Diabetes VP Michael Mason described a 2015 outcomes-based contract for Trulicity that had been “completed” with “a major payer in the US" during a June 17 presentation to analysts on its diabetes business.

As part of that arrangement, Mason said, “we defined what a good outcome would be for those coming naïve into the GLP class, and that was a combination of, are they at goal at A1C and are they adherent to the medication? And then we compared the performance of Trulicity versus the performance of other GLPs. And if we outperformed the other GLPs, we’d receive a rebate credit. If we didn’t, then we would pay a higher rebate.”

The result of the contract was that “we did come out and show superior outcomes relative to the other GLPs, and we received a rebate credit,” Mason added. The arrangement he described is similar to but not exactly the same as the Harvard Pilgrim deal, which does not include a medication adherence component, according to Sherman.

Lilly’s confidence in Trulicity is also based on a successful head-to-head trial showing noninferiority to Victoza. The AWARD-6 trial, presented in June 2014 at the American Diabetes Association annual meeting, met that mark ([A#00140616007]).

The company is talking to other payers about similar contracts, Lilly Director of Payer Strategies for Diabetes Tony Lawson said in an interview.

“We’re working with a number of national payers and [pharmacy benefit managers] to design these types of programs,” he said in an interview. “We ultimately see these types of agreements as important for the future.”

A Precedent-Setting Contract

For Harvard Pilgrim, the arrangement for Trulicity marks an “evolution” in performance-based contracting because while previous agreements have focused on a drug reaching specific endpoints, such as LDL cholesterol, this one involves head-to-head competition, Sherman pointed out.

“We’re really thrilled that Lilly is stepping up” and taking on the challenge, he added. “It’s another way to get to a compelling value proposition.” Harvard Pilgrim has been one of the more proactive payers in executing outcomes-based contracts, despite the challenges involved ([A#14160602002]).

For example, Harvard Pilgrim announced in late 2015 it had signed an outcomes-based contract with Amgen Inc. for Repatha (evolocumab) ([A#14151109003]).

The deal includes "a pay for performance guarantee through which Amgen is taking financial risk by providing the health plan with an enhanced discount if the reduction in LDL levels for Harvard Pilgrim members is less than what was observed during clinical trials,” the payer explained. The agreement also provides for additional discounts if utilization of the drug exceeds certain levels.

Another of Harvard Pilgrim’s performance-based arrangements is with Novartis AG for the heart failure treatment, Entresto (sacubitril/valsartan). The contract provides Harvard Pilgrim with a discount if Entresto does not lead to a specified reduction in hospitalizations for congestive heart failure. The deal was also announced June 27.

Novartis has signed outcomes-based contracts for Entresto with Cigna Corp. and Aetna Inc. as well ([A#14160212001]).

Looking ahead, Harvard Pilgrim has discussions around outcomes-based contracts ongoing with other manufacturers, including one “very substantive” negotiation that “would involve paying one price regardless of the amount of drug used,” Sherman said. Other discussions are less specific and may not produce a contract in the near term but are nevertheless important because they are advancing the notion of contracting based on value, he pointed out.

Lilly's Performance Contract For Trulicity Hinges On Head-To-Head Superiority

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