As our healthcare system moves toward higher value and lower total cost of care, integrated delivery networks (IDNs), consisting of providers, sites, and systems that care for and provide services to populations in specific geographic locations, are expanding and transforming in scope, size, and influence. While we have seen the expansion of traditional IDNs, such as Kaiser Permanente, Geisinger, UC Health, Partners Healthcare System, New York-Presbyterian, University of Pittsburgh Medical Center, and Cleveland Clinic Health System, where physicians work with hospitals and/or health plans to deliver a range of preventive and acute care services in a variety of care sites, we are also seeing the initial emergence of new IDN-like models. These new models are the result of the increased number of consolidations and partnerships seeking to transform themselves into integrated ecosystems delivering multiple services, from prevention to chronic care management, seamlessly across the continuum of care. Examples include CVS-Aetna, Haven, and others.

Many of these IDNs function differently and can be heterogeneous in structure and services delivered; however, their purpose is strikingly similar: providing high-quality, coordinated care to improve patient health outcomes while reducing the total cost of care. Given the resources spent on prescription and specialty medications, this focus extends to the formulary decision-making process. Below are key considerations and emerging trends IDNs are focusing on when evaluating therapies for formulary inclusion given the increased attention on cost and value in the current environment.

  1. The use of real-world evidence — Real-world evidence (RWE) is increasingly being used in formulary decision-making. RWE adds to established measures such as monitoring safety, conducting utilization management, and examining costs of therapies, as the relevance to payers, timeliness of the real-world data, and transparency of analytic methods increase.
  2. Outcome-based and value-based contracts — Closed systems and high-control IDNs—those that can impact prescribing behaviors, have access to systems and tools to monitor changes in core measures, and have analytic capabilities to harness insights from big data—are venturing into more outcomes-based and value-based contracts. While most are still in the exploratory stages, IDNs appear to be moving in this direction as a solution to rising costs in healthcare.
  3. Step therapy-like programs — IDNs will continue to promote programs similar to step therapy—a prior authorization program that recommends the use of less expensive but effective therapies before the use of more expensive medications, depending on a patient’s coverage policy.
  4. Cutting out middlemen — Some IDNs are moving away from their traditional practice of working with group purchasing organizations (GPOs) in their dealings with pharmaceutical manufacturers and directly engaging and contracting with drug companies. This approach is a means to further reduce costs and in some cases set up value- and/or outcomes-based contracts that can support their Triple Aim efforts of better care, better outcomes, and better costs.
  5. Increase use of biosimilars — Some of the larger IDNs have been early adopters of biosimilars; for example, the rapid adoption of Zarxio by Kaiser Permanente. With increased clinical awareness and experience with biosimilars, as well as growing literature around adopting biosimilars, more IDNs are looking to adopt biosimilars in 2020, especially in the oncology space, as an opportunity to cut out-of-pocket patient costs and overall drug spend.
  6. Traditional and nontraditional decision makers — The purchasing processes, and in some cases, the formulary decision-making process in some IDNs rely on both traditional decision makers, such as physicians and pharmacists, and nontraditional decision makers, such as IDN administrators who are not writing prescriptions. These nontraditional decision makers are looking at business considerations in addition to the clinical and are increasingly carrying significant weight in IDN formulary and purchasing decisions, a major shift in the traditional decision-making process.

As US healthcare continues to evolve with a focus on value, it will be critical for manufacturers to stay abreast of these trends, understand the IDNs’ focus and goals, and be ready to demonstrate clear economic value and improved outcomes for their therapies to these networks, systems, and stakeholders.