The Outcomes-Based Reimbursement Experiment

Value-based reimbursement contracts between pharmaceutical manufacturers and US payers appear to be gaining momentum, with several such contracts signed in the last year. But while tying the cost of a drug to the value it delivers appeals to both payers and drug manufacturers, regulatory roadblocks and execution challenges will limit their adoption in the near term. Their viability long-term will probably depend on the savings they deliver to the US healthcare system.

The shift towards outcomes-based reimbursement is in some ways a middle ground for insurers and drug companies. The insurer is...