Oritavancin Outcomes-Based Contract With Oklahoma Medicaid May Be the New Normal

Updated: 12/20/2018 at 5:23 PM EST

Apparently, it pays to be an effective antibiotic.

Last summer, the Oklahoma Medicaid program announced plans to experiment with outcomes-based contracts for certain prescription drugs. Among the early beneficiaries: oritavancin, marketed under the brand name Orbactiv by drug

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maker Melinta Therapeutics. The drug will now be listed by the state’s Medicaid program as a first-line treatment for bacterial skin infections.

“As we shift towards value-based health care, I think we will begin to see more outcomes-based contracts,” Brintha Vasagar, MD, a physician who treats bacterial skin infections as part of her clinical practice, told Contagion® and has published on the topic. “This certainly makes sense for oritavancin.”

Indeed, according to reports on the one-of-a-kind deal, Oklahoma’s Medicaid program had previously required that providers apply for prior authorization before prescribing the drug

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because it is more expensive than other options. As part of the new arrangement, however, prior authorization will no longer be required. In exchange, Melinta is contractually obligated to ensure that oritavancin’s use will not result in net health care cost increases for the state’s Medicaid program.

Although the drug is, in and of itself, more expensive than

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other options, including vancomycin, daptomycin, linezolid, telavancin, or ceftaroline (all of which require multiple doses over several days), it does not require hospitalization for administration, as it is given as a single-dose, one-time infusion. That may help reduce the overall costs. In fact, a 2017 study published in Infectious Diseases and Therapy found that oritavancin showed comparable clinical effectiveness to the multidose drugs in an outpatient setting, with 90.2% of patients achieving “successful outcome." It was also found to be “associated with lower costs (per-patient savings $2,319) and reduced resource utilization measures.”

“While on the surface level, oritavancin appears to be a more expensive medication, it avoids the overall healthcare costs of hospitalization required for alternative treatments,” Dr. Vasagar told Contagion®. “From a physician point of view, avoiding prior authorization gives physicians more autonomy in determining the best treatment for each patient based on their individual needs and complicating conditions. By removing the barriers of higher initial cost and required prior authorization, this agreement actually gives physicians more freedom to evaluate all treatment options and choose what is best for their patients.”

The contract with Melinta is actually the second outcomes-based contract the Oklahoma Health Care Authority has signed this year. In July, the agency negotiated a deal with drug manufacturer Alkermes for the long-acting injectable, antipsychotic drug aripiprazole lauroxil (Aristada), which is used in the treatment of schizophrenia. The contract is set up to incentivize patient adherence (a historic problem with schizophrenia patients). Both deals were made based on currently available outcomes data and supported by the National Academy for State Health Policy, a nonpartisan forum of state-level policymakers.

For its part, perhaps not surprisingly, Melinta is pleased with the arrangement and believes that it marks a watershed moment in delivery of care under government-run programs such as Medicaid. David Belian, director of media relations and communications at the company, told Contagion® that the contract “underscores our belief in the value [oritavancin] can provide, both therapeutically and economically, to patients, providers, and health care systems as a single-dose alternative to a multiple dose vancomycin course of therapy for adult patients with acute bacterial skin and skin structure infection caused by susceptible, indicated pathogens.” He added that the company feels the agreement “has the potential to provide a mutual benefit” to Melinta and the Oklahoma Medicaid program, while improving patient access to an important drug.

Although it is obviously the first such contract for the company, according to Belian, its executives are currently in the process of evaluating similar arrangements with other states. “We believe that value-based agreements such as these can provide an innovative way to improve access to important treatment options for Medicaid patients, while also helping to bring down costs for payers," he noted.

In other words, the future may indeed be now.