Value-based Healthcare today and tomorrow by Deloitte.

VBHC today and tomorrow
DayOne Experts, VBHC Conference
18th June 2020
Elizabeth Hampson ehampson@deloitte.co.uk

© 2020 Deloitte LLP. All rights reserved. 2VBHC today and tomorrow
There is an increasing need for a VBHC based on holistic patient and health system outcomes –
success can only be reached by a genuinely collaborative approach
Requirements for success
Value-based healthcare (VBHC) is a healthcare delivery
model in which product and service providers are paid
based on holistic patient and health system outcomes
Defining VBHC
Investments in capabilities
/ infrastructure
Real world data
collection
Care pathway
shaping
Trust and
collaboration
between
stakeholders
A learning
health system
Patient trust and
preferences
• Rising barriers to reimbursement of innovation
around Europe
• An increasing need to demonstrate value for the
health system from a multiple stakeholder
perspective
• Novel therapies with binary health outcomes (e.g.
gene therapy) or rare diseases for which long-term
outcomes for patient are yet unknown
• A requirement to be aligned to the system to share
risk and facilitate better outcomes for patients.
Driving forces

VBHC contracts can be based on cost, evidence and risks, and require a more collaborative relationship between life sciences, payers, providers and patients, in which all members work
together to improve patient outcomes and the performance of healthcare
OUTCOMES
SERVICE
FINANCIAL
HYBRID
Source: (1) Deloitte research
In order to ensure patient access GWQ offered
Novartis an outcomes-based risk-sharing deal by
agreeing to reimburse part of the €320K cost if the
patient dies within a set period of time
2019
In order to support payer uncertainty on its longer-
lasting diabetes drugs and address the data collection
burden, Eli Lilly entered into a joint research and multi-
year data generation agreement with Humana Inc.
The research was aimed at measuring impact of
interventions on outcomes, adherence programmes,
disease management and pharmacoeconomics
2013
A financially based deal where treatment
duration for soft tissue sarcoma with
Yondelis was capped at 5 cycles, cost of
administration beyond this duration were
not covered
2010
One of the first instances of a “pay for cure
scheme”, where a volume based discount was
agreed between Gilead and CEPS based on the
expected number of patients requiring treatment,
with a 100% rebate mechanism linked to
performance
2014
A Managed Access Agreement for Vimizim indicated for
Mucopolysaccharidosis Type Iva, a rare metabolic rare disease is signed that
has both outcomes and financial elements. The agreement enatailed the
creation of a 12 year disease registry to capture and track outcomes (incl. 6
minute walking test, FEV-1, QoL, Beck depression score)
2015
The importance of VBHC is increasing and there are a range of proven and emerging contracts

Improve patient outcomes with
value-adding services
Consider the unintended
consequences on patient and
system
Incorporate effective controls
and audit capabilities to
accurately manage financial
flows
Build a learning system –
develop, test, scale, manage and
evolve
Run
Balance practicality with cost /
complexity
Clarify responsibilities for all
parties involved in the contract
Engage in early dialogue with
key stakeholders
Create value for all stakeholders
Design
All VBHC contracts go through three phases (Understand -> Design -> Run) – experience has
taught us that, amidst these phases, there are 12 critical factors that determine success
Address a genuine payer/
patient/ provider problem
Demonstrate trust on aligned
interests and with the data
Understand the data barriers
and invest in solving them
Ensure clarity on ‘what we’re
solving for’ and maintain a focus
on desired outcomes
Understand

Factors that increase willingness / need to
engage
• Greater outcome uncertainty: Due to small
and short duration clinical trials creating
incentives for clinical & financial data
collection
• High costs: Putting pressure on annual
health care budgets and increasing the
focus on value for money
• Misalignment in timings: Between costs
incurred / product delivery & benefits
realised
• Easily identifiable patient population: For example
diagnostic testing creating a tighter definition of
eligible patients
• Consolidated care delivery: A lower number of
specialist centres provides additional control /
oversight, small number HCPs
• Engaged patients & physicians: Willing to comply
with enhanced monitoring / outcome tracking to
enable medicines access
• Policy focus: policy environment more supportive in
precision medicine or areas of high unmet need
Factors that increase feasibility of
VBHC
To date success in VBHC has been both a reflection of willingness and feasibility and this has
been more in place for rare diseases

Different countries have different attitudes / success with VBHC and tracking the types of
contract in place shows important emerging trends
Value-based healthcare
63
18
18
14
10
6
5
2
1
1
Australia
Italy
UK
Spain
France
Canada
Germany
Denmark
Norway
Sweden
Contracts by country (OBC)
• Italy has seen a steady increase in
outcomes-based contracts
• Australia, UK and Spain have the
next largest number of outcomes
based contracts
• The majority of countries have
more financial type contracts
• Oncology has by far the largest
number of contracts
1
4
1 2
9
6 7
9
6
10
26
9 9
20
14
5
20132004 2005 20082007 20102006 2009 2011 2012 2014 20162015 2017 2018 2019
Contracts by country (OBC)
Contracts by type
Both
Unknown
Financial
Outcomes
(OBC)
489
(67.3%)
138
19.0%
68
9.4%
32
4.4%
Contracts by TA (OBC)
81
13
11
5
4
4
3
2
2
2
2
1
1
7
Inflammation
CNS
Neurology
Rare diseases
Oncology
Endocrinology
Autoimmune
Nephrology
Orthopedic
Metabolic
Pulmonary
Cardiology
Cardiovascular
Other
Contracts by company (OBC)
28
15
13
12
7
6
6
5
4
3
3
3
3
30
Takeda
Pfizer
Other
Merck
Janssen
Novartis
Roche
AstraZeneca
Abbvie
Amgen
Janssen-Cilag
Celgene
Eli Lilly
Gilead Sciences

Along the journey, stakeholders face several critical challenges in executing VBHC agreements –
experience has shown that these barriers are more often overcome in rare diseases
• Misalignments in definition of
patient population for
tracking/measurement
• Misalignments in defining
outcomes / metrics to be
measured
• Complexity in quantifying
outcomes-based benefits
• Failure to recognise how
different drugs generate value
in different ways and need for a
segmented approach
Determining the
appropriate measures of
value to link payment
• Value-based contracts require
different skills and more
resources to administer,
monitor and adjudicate than
traditional contracts
• Difficult to operationalise
multiple IVS simultaneously
because of inefficiencies that
exist in the system, limited
capabilities to analyse data or
lack of dedicated resources
• Other variables that could
impact the outcomes of drug or
device use include:
- Patient factors Physician
factors Reimbursement
hurdles
- Legal and compliance
considerations
• Value-based contracts require
capturing and analysing data and
tracking individual patients, their
treatments, and outcomes
• Validation and analysis will
require collaboration and trust
between pharma, providers and
payers, and both sides should
agree on methodology early in
the process
• There is general unwillingness to
base IVS on samples of patients /
sites, leading to unreasonable IVS
development costs
Administrative burden
to operationalise VBHC
Uncontrollable factors
that influence outcomes
Collecting, integrating, and
analysing real-world data
STRATEGIC OPERATIONAL
• Misalignments in incentives,
structures and policies that
shape the behaviour and
interactions of different
stakeholders result in
suboptimal outcomes and
uptake of innovations
• Some example issues include:
- Organisations incurring cost
vs. those achieving savings
- Costs incurred in year,
savings over multiple years
- Managing performance
based contracts alongside
utilisation based contacts
Misaligned incentives
among payers, providers
and pharma

However, the appearance of COVID has drastically impacted the healthcare sector – it is likely
that the changes may have an effect on VBHC
Source: (1) Deloitte, fasken.com, cen.acs.org pharmaintelligence.informa.com, fintechmagazine.com

We have identified six key areas, in relation to healthcare, whereby COVID will have a major
impact – these can be viewed through both a short term and medium term lens
Themes
Prioritisation of patients
Workforce
Technology/innovation
Funding
Regulation
Role of mental health
• Backlog of patients for elective care
• Amplified severity of patient conditions
• New views on ‘essential’ services
• Drop in “core” workers as retirees and students leave
• Potential normalisation of large-scale volunteer
networks in health systems
• Increased outsourcing of functions
• Greater scrutiny of spending, especially high-priority areas
• Increased funding for prevention of infectious diseases
and for stockpiling
• Increased use of data to define value for health system
• Switch in regulator priority framework and resource
allocation to address most important issues at the time
• Potential for greater collaboration / sharing of resources
between regulatory
• Permanent shift in primary care delivery models
• Greater understanding of infectious diseases / treatments
• More efficient processes for introduction of new drugs
and treatments
• Rise in profile of mental health on physical health
• Increase in patient numbers due to effects of lockdown
• Increase in patients who are employed by NHS due to
peak period
• Postponement of some elective care
• Increased triaging of patients, particularly on Intensive
Care wards
• Reduction in visits to A&E, etc.
• Greater stress, pressure and illness on workforce
• Relief in some health systems due to short term boost in
numbers from students / retirees and 3rd party workers
• More volunteers in Health systems & “adjacent” markets
• Increase in funding to healthcare services for short-term
provisions, etc.
• Reallocation of budgets to ‘front-line’
• Debt write-offs
• Regulators prioritising resources toward Covid-related
tests, vaccines, treatments, etc.
• Increased use of technology in patient interactions,
driven by lack of F2F appointments
• New health “surveillance” tech developed to monitor
health of population
• Mental health providers seconded and co-opted into
direct Covid response roles
• Rise in demand for emergency healthcare
SHORT TERM IMPACT MEDIUM TERM IMPACT

COVID will also catalyse many of the major trends currently seen in the Life Sciences industry –
these range from collaboration, innovation, VBC, analytics to patient engagement
Trends in the LS industry Why COVID accelerates this trend
New players and partnerships 1. New disruptive entrants and partnerships
• Need for new technologies / solutions leads to increased number of entrants
including non-traditional equipment manufacturers / digital health providers
• New cross-industry partnerships are needed to support response e.g., data
sharing, supply chain manufacturing, etc.
Innovation characteristics
2. Innovative & disruptive med tech medicines requiring changes
in pathways, funding flows & HTA methodologies
• Potential new treatments and technologies required and require accelerated
approvals and pathways for innovative solutions
• Greater acceptance of telehealthcare, new engagement models and
acceleration of remote care delivery
• Drugs assessments are have been reprioritised based on unmet need and
regulator attitudes have shifted
3. Accelerating pace of new technologies emerging and the need
to keep pace
4. Shift to preventative and curative away from disease
modification symptom management
• The rising profile of mental health during COVID and the impact of wellbeing
behaviours on physical health will gain new prominence post-COVID
Value-based care
5. Demand for system value, rather than stakeholder value with
a growing interest in value based healthcare (VBHC)
• Greater focus on the holistic value encompassing clinical, economic and
humanistic value from individual and population health standpoints
Data analytics and insights
6. Emphasis on other data sources such as RWE and patient
owned data as well as linked healthcare datasets
• New datasets, PROs and RWE have been used and integrated to understand
COVID and investigate potential treatments. Live demonstration of true value
of real time data on tracking of population health
Patient engagement
7. Engaged consumers interested in personalised, patient
centred positioning and in disease prevention
• Large portion of the population is now more engaged with their own health,
tracking symptoms and understanding disease prevention
These trends will continue to accelerate in a post-COVID environment

Staffing R&D and
manufacturing
Communicating
key messages
Diagnostic &
support services
Partnering &
collaborating
• Provided staff to backfill
programmes where health
staff have been moved
• Open sourced IP to increase
production, including resource
diverting to make equipment
and consumables
• Supported seroprevalence studies and
provided antibody screening
• Leveraged telephone lines or support
programmes to support patients, or
clinicians
• Pivoted their R&D
capabilities, to
accelerate the
development of
vaccines and treatments
for COVID
• Leveraged their
marketing and
communication skills
to support the
dissemination of
public health
messages
• New partnerships
between pharma &
academia,
including social
enterprises, to help
vaccine &
treatment
development
• Helped the supply
chain to manage
the disruption and
high demand for
services and
products
In the midst of such developments, post-COVID presents a unique opportunity for the industry
– greater VBHC and collaboration with public health stakeholders
1More real world evidence (RWE), patient reported outcomes
(PROs) and stronger Value Based Healthcare (VBHC)
propositions are needed
Build stronger evidence of value
2Understand how innovation impacts health system capacity
and develop new care models to support system capacity
and innovation adoption (e.g. virtual, direct to patient and
community based models)
Support health systems to develop skills / capacity
Renew the focus on digital given the rapid shift in health
system attitudes (e.g. digital clinical trials, digital customer
engagement and marketing) to drive efficiencies and better
outcomes
Leverage change in attitudes to digital 3
4Continue to build trust with greater focus on early engagement
with regulators and payers and medical led engagement
leading to system solutions, rather than sales led discussion
Engage differently with the health system
FOUR KEY ACTIONS / OPPORTUNITIES FOR THE INDUSTRY POST-COVID
Despite the challenges facing the industry, there are key opportunities that will allow
disruption to be leveraged…
These actions have enabled greater trust and supported life science relationships with public
health stakeholders…
EXAMPLES OF WAYS LS BUSINESSES HAVE BEEN SUPPORTING HEALTH SYSTEMS

References
https://novonordiskfonden.dk/en/news/the-novo-nordisk-foundation-has-awarded-up-to-dkk-250-million-to-statens-serum-
institut-ssi-in-connection-with-the-establishment-of-a-national-covid-19-test-centre/
https://www.thelocal.dk/20200421/denmarks-new-agency-will-test-20000-people-a-day-for-coronavirus
https://www.berlingske.dk/business/store-danske-virksomheder-stormer-til-hjaelp-mod-coronavirus
https://www.ft.com/content/5a364eb0-780c-11ea-bd25-7fd923850377
https://www.powder.com/stories/news/these-outdoor-companies-are-making-personal-protective-equipment-to-fight-
covid-19/
https://industryeurope.com/sectors/hygiene-medical-pharmaceuticals/list-of-manufacturers-switching-to-hand-sanitiser-
keeps-growing/
https://www.entrepreneur.com/article/349692
https://www.aljazeera.com/indepth/features/fears-rise-uk-coronavirus-patients-backlog-grows-200427132425660.html
https://www.huffingtonpost.fr/entry/coronavirus-les-operations-medicales-non-urgentes-
deprogrammees_fr_5e6a6e67c5b6747ef1190ab2
https://www.cbsnews.com/news/750000-volunteers-answer-call-to-help-u-k-health-service-manage-coronavirus-crisis/
https://www.swissinfo.ch/fre/crise-sanitaire_les-stagiaires-en-m%C3%A9decine--engag%C3%A9s-volontaires-sur-le-front-de-
la-pand%C3%A9mie/45697194
https://www.lenouvelliste.ch/dossiers/coronavirus/articles/coronavirus-des-initiatives-solidaires-dans-tout-le-canton-
920378
https://www.swissinfo.ch/eng/bloomberg/virus-drives-patients-to-virtual-doctors-and-buoys-telemedicine/45612266
https://www.healthcarefinancenews.com/node/140009

References (cont.)
https://www.agid.gov.it/it/agenzia/stampa-e-comunicazione/notizie/2020/04/17/ricetta-medica-digitale-il-punto-sulle-
novita
https://www.gov.uk/government/publications/nhs-debt-write-off-regional-breakdown
https://ec.europa.eu/jrc/communities/en/community/jrc-alumni-network/article/covid-19-commission-creates-first-ever-
resceu-stockpile-medical
https://sciencebusiness.net/covid-19/news/covid-19-crisis-forces-eu-prepare-plan-b-and-plan-c-seven-year-budget
https://www.swissbiotech.org/listing/covid-19-developers-of-medicines-or-vaccines-get-free-scientific-advice-by-european-
medicines-agency/
https://www.swissmedic.ch/swissmedic/en/home/news/coronavirus-covid-19/acss-consortium-kampf-gegen-covid-19.html
https://www.bbc.com/news/uk-scotland-52280857
https://www.bbc.com/news/world-europe-52491203
https://www.fasken.com/en/knowledge/2020/04/21-au-dela-de-la-covid-19-monde-different-et-collaboration-amelioree/
https://cen.acs.org/biological-chemistry/infectious-disease/coronavirus-transform-science/98/i14
https://pink.pharmaintelligence.informa.com/PS142088/COVID19-Shakes-Up-RealWorld-Data-Studies
https://www.fintechmagazine.com/fintech/covid-19-call-digital-transformation

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