Alternative Payment Models for Innovative Medicines: A Framework for Effective Implementation

Frederick McElwee, Amanda Cole (), Gomathi Kaliappan, Andrea Masters and Lotte Steuten
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Frederick McElwee: Office of Health Economics
Amanda Cole: Office of Health Economics
Gomathi Kaliappan: F. Hoffmann-La Roche AG
Andrea Masters: F. Hoffmann-La Roche AG
Lotte Steuten: Office of Health Economics

Applied Health Economics and Health Policy, 2025, vol. 23, issue 4, No 2, 535-549

Abstract: Abstract Scientific advancements offer significant opportunities for better patient outcomes, but also present new challenges for value assessment, affordability and access. Alternative payment models (APMs) can offer solutions to the ensuing payer challenges. However, a comprehensive framework that matches the spectrum of challenges with the right solution, and places them within a framework for implementation, is currently missing. To fill this gap, we propose evidence-based steps for the effective selection and implementation of APMs. First, contracting challenges should be identified and mapped to potential APM solutions. We developed a decision guide that can serve as a starting point to articulate core problems and map these to APM solutions. The main problem categories identified are: budget impact and uncertainty, value uncertainty, and the scope of value assessment and negotiation. Sub-categories include affordability, uncertainty of effectiveness, and patient heterogeneity, which map onto APM solutions such as outcome-based agreements, instalments, and subscription models. Just as important are the subsequent identification and assessment of the feasibility of potential solutions as well as collaboration to reach agreement on the terms of the APM and lay the groundwork for effective implementation. We adduce recent examples of APM implementation as evidence of how commonly cited implementation barriers can be overcome by applying pragmatic design choices and collaboration. This step-by-step framework can aid payers and manufacturers in the process of effectively identifying, agreeing on, and implementing APMs to advance patient access to cost-effective medicines, while at the same time providing appropriate incentives to support future innovation.

Date: 2025
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DOI: 10.1007/s40258-025-00960-1

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