Value-Based Payment for Medical Products


Amidst the broader shift from a fee-for-service (FFS) payment structure to a value-based U.S. healthcare marketplace, significant concerns have arisen over a medical product pipeline that is full of innovative - but also high-cost - therapies. These concerns have led to increased interest in developing new payment and alternative financing models for health care that strive to ensure better outcomes for the dollars spent, and thus higher value. Some limited but growing experience exists with these models, broadly referred to as Value-Based Payment (VBP) arrangements, but key regulatory, operational, and infrastructure challenges remain.

Our Approach

Duke-Margolis has formed a Value-Based Payment Consortium to address these challenges and to better align policies for VBP implementation. The Consortium—composed of patient advocates, payers, manufacturers, and providers, as well as experts on regulatory affairs, law, and policy—is developing approaches to payment reform that support better outcomes for patients and better value across the system. The Consortium seeks to overcome current barriers to VBP arrangements by identifying and developing solutions to legal and regulatory issues, and by addressing operational challenges such as fragmented and difficult-to-track patient outcome data. Additionally, the group will develop conceptual frameworks for structuring VBP arrangements, facilitate stakeholder input and support, and explore other novel approaches leading to greater value.

In addition to the Consortium, the Margolis Center is undertaking complimentary work to further support advancement of value based payment. These activities have included workshops dedicated to advancing payment reforms for Alzheimer’s therapies and within the oncology space, as well as a survey with the National Pharmaceutical Council to better understand the negotiation process for Value-Based Payment arrangements. Additionally, Duke-Margolis has been engaging stakeholders to develop and refine a proposal that would provide developers with a return of investment for Antimicrobial Innovation while also supporting stewardship.

Background on the Issue

Duke-Margolis has produced a white paper to provide background on value-based reimbursement for medical products, which can be downloaded.


Transformative Therapies

Duke-Margolis, with guidance from its Value-Based Payment for Medical Products Consortium outlines novel value-based payment models and how they can expand access for patients to transformative therapies. By constructing risk-sharing between payers and manufacturers for these potentially life changing therapies, these models offer an important option to the strictly volume-based, fee-for-service environment.

Advancing Value-Based Payment for Transformative Therapies

Legal and Regulatory Issues

Duke-Margolis and members of the consortium have released a white paper providing recommendations for overcoming legal and regulatory barriers to value-based payment for medical products, which can be downloaded.

Overcoming Legal and Regulatory Hurdles to Value-Based Payment Arrangements for Medical Products

Clarifying Medicaid Best Price Regulations In the Context of Value-Based Payment Arrangements

Duke-Margolis Project Team

Mark McClellan, MD, PhD
Robert J. Margolis Professor of Business, Medicine, and Policy; Director, Duke-Margolis Center for Health Policy, Duke University

Marianne Hamilton Lopez, PhD, MPA
Research Director

Adrian Hernandez, MD
Professor of Medicine and Director, Health Services Outcomes Research, Duke Clinical Research Institute, Duke University

Arti Rai, JD
Professor of Law and Co-director, Duke Law Center for Innovation Policy, Duke University

Monika Schneider, PhD
Managing Associate

Christina Silcox, PhD
Managing Associate

Gillian Sanders-Schmidler, PhD
Professor of Medicine, Duke University Medical Center

Corinna Sorenson, PhD, MHSA, MPH
Assistant Professor of Medicine, Duke University

Advisory Group

Alan Balch, Chief Executive Officer, Patient Advocate Foundation

Thomas Barker, Partner and Co-Chair, Healthcare Practice, Foley Hoag

Amy Bassano, Deputy Director of the Center for Medicare and Medicaid Innovation, Centers for Medicare and Medicaid Services

Jonathan Blum, Independent Consultant

Marc Boutin, Chief Executive Officer, National Health Council

Perry Bridger, Vice President, Global Value, Payer Access and Public Policy, Edwards Lifesciences

Chuck Bucklar, Vice President, North America Commercial Operations, BioMarin

Tanisha Carino, Executive Director, FasterCures

Alexandra Clyde, Corporate Vice President of Global Health Policy, Reimbursement and Health Economics, Medtronic

Gregory Daniel, PhD, MPH, Head, U. S. Healthcare Policy, Edwards Lifesciences

David Macarios, Vice President Global Evidence and Value Development, Allergan

Patrick Courneya, Executive Vice President and Chief Medical Officer, Hospitals, Quality and Care Delivery Excellence, Kaiser Permanente

Darin Gordon, President and CEO, Gordon & Associates, LLC

Tim Hunt, Senior Vice President, Corporate Affairs, Editas Medicine

Doug Ingram, Chief Executive Officer, Sarepta

Alex Krikorian, Vice President, Pharmaceutical Strategy and Contracting, Anthem

Leigh Anne Leas, Vice President and US Country Head, Health Policy, Novartis

Nick Leschly, Chief Executive Officer, bluebird bio

Paul Levesque, Global President, Rare Disease Group, Pfizer Innovative Health, Pfizer Inc.

Jeff Marrazzo, Co-Founder and Chief Executive Officer, Spark Therapeutics

Steve Miller, Senior Vice President & Chief Medical Officer, Express Scripts

Bruce Nash, Chief Physician Executive and Senior VP for Health and Medical Management, Blue Cross Blue Shield of Massachusetts

Joshua Ofman, Senior Vice President, Global Value, Access & Policy, Amgen

Jonathan Perlin, President of Clinical Services and Chief Medical Officer, Hospital Corporation of America

Rekha Ramesh, Executive Director, Head of Policy, Gilead Sciences

Jill Ehrlich Robinson,  Senior Director, Advocacy Relations, Verastem Oncology

Matt Rouscalf, Senior Director, State Policy, GlaxoSmithKline

Lewis Sandy, Executive Vice President, Clinical Advancement, UnitedHealth Group

Michael Sherman, Chief Medical Officer and Senior Vice President, Harvard Pilgrim Health Care

Reka Shinkle, Vice President, Commercial and Portfolio Planning, Regenxbio

Surya Singh, President, Singh Healthcare Advisors

Maria Stewart, Global Vice President, Health Economics and Market Access, Boston Scientific

Susan Winckler, Chief Risk Management Officer, Leavitt Partners/President, Leavitt​ Partners Consulting


This project is made possible through the generosity of the Margolis Family Foundation, which provides core resources for the Center, as well as a combination of financial and in-kind contributions from consortium members including Allergan, Amgen, BioMarin, bluebird bio, Boston Scientific, Editas Medicine, Edwards Lifesciences, Gilead, Medtronic, Novartis, Pfizer, REGENXBIO, Sarepta, Spark Therapeutics, and Verastem.

Participation of private or non-profit organizations in Center activities does not imply an endorsement by Duke University or associated entities. As part of Duke University, Duke-Margolis honors the tradition of academic independence on the part of its faculty and scholars. Neither Duke nor the Margolis Center take partisan positions, but the individual members are free to speak their minds and express their opinions regarding important issues. Duke Margolis adheres to all institutional policies on research independence and conflict of interest.