Three ways pharmaceutical manufacturers benefit from a drug warranty

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Reduce payer risk, increase patient access, and strengthen market differentiation with drug warranty programs.

The adoption of drug warranty programs is one way that today’s pharmaceutical manufacturers can address the mounting pressure they face to demonstrate the value and justify the price of their advanced therapies. These companies must navigate competitive market dynamics, payer expectations, and regulatory scrutiny. Above all, their top priority remains to deliver more high-quality treatments to more patients.

Drug assurance programs — which establish warranties between manufacturers and end payers based on prespecified clinical outcomes — offer an innovative way to help address this complexity. They are designed to reduce financial risk for payers and therefore improve patient access, creating a more efficient, aligned ecosystem among healthcare stakeholders.

For pharmaceutical manufacturers like you, drug assurance programs can strengthen your market position and accelerate adoption of your therapies. Below are three key advantages for your organization when implementing a drug warranty program.

1. Greater patient access by way of increased payer access

One of the most significant barriers to patient access for costly treatments is payer hesitation, particulary among smaller payers. True end payers — distinct from intermediaries such as administrative services organizations or pharmacy benefit managers that often receive price concessions under other models — want to know if they are going to spend $3 million on a high-cost specialty therapy for a patient, that it’s going to deliver on its promise. Health plans and health plan sponsors, patients, and in some cases even healthcare providers can qualify as end payers.

Depending on the therapy and manufacturer, a drug warranty typically provides assurance that if a particular clinical outcome is not achieved during a prespecified time, the manufacturer will reimburse the end payer up to the full cost of therapy.

This risk-sharing model incentivizes payers to authorize the drug more readily, knowing that their financial risk is mitigated. Patients benefit from earlier and more consistent access to innovative therapies because end payers have a safer, more financially feasible access point.

Coverage vs. authorization

True end payers, as mentioned earlier, are distinct from intermediaries that often receive price concessions through rebates and other market access tools, like outcome-based agreements (OBAs) or value-based agreements (VBAs).

OBAs and VBAs are bilateral contracts between manufacturers and intermediaries that exclude end payers from contract visibility and benefits, often leaving many end payers, like health plans who often authorize the use of high-cost drugs, unaware of these programs and their potential value. Consequently, these agreements provide limited incentives for end payers to authorize treatments or improve patient access.

Coverage refers to the intermediary allowing access to a drug by putting it on their formulary, or a list of prescriptions approved for use by a health insurance plan or system. Authorization refers to the end payer (sometimes in conjunction with the intermediary) approving the use of the drug in an individual patient. A therapy with extremely high coverage rates does not necessarily mean the product will actually receive high authorization, especially high-cost therapies where the end payer is a major part of the authorization process. Unlike OBAs and VBAs which are misaligned to intermediaries to assure value, warranties are oriented to end payers who will actually value the assurance it provides and consider it when making authorization decisions.

2. Enhanced go-to-market strategy and product differentiation

In a crowded pharmaceutical market, differentiation is key. Drug warranty programs serve as a strategic market access tool, signaling to payers, providers, and patients that your company is confident in the therapy’s performance and willing to back it financially. This can be a decisive factor when payers consider authorization from among multiple competing products, especially in therapeutic areas with several treatment options. In indications without competition, a manufacturer can still use a drug warranty program to reduce financial risk and support its pricing decisions around its therapy, maximizing the product’s value case.

Manufacturers that proactively adopt drug warranties may also position themselves as partners in advancing the value-based care (VBC) model, which is increasingly favored by payers and health systems. VBC prioritizes delivering high-quality care in the most cost-effective manner. With more payers opting to support these treatments for patients, high-quality care has wider reach to change more lives. This approach not only facilitates market entry but may also pave the way for long-term, direct relationships between manufacturers and end payers that can benefit future product launches.

3. Greater efficiency and healthcare ecosystem alignment

Implementing a drug warranty program requires collaboration and alignment among a wide array of stakeholders — manufacturers, end payers, providers, and patients.

One of the barriers with other market access tools like OBAs has been the complexity of aligning incentives and operationalizing contracts. Negotiating multiple contracts with different intermediaries, for example, can be time-consuming, complex, and limits the value of such contracts only to payers associated with the contracted intermediaries. More importantly, end payers may not even benefit from the full value of their reimbursement, let alone know of their existence.

Drug assurance programs are oriented directly between the manufacturer and end payer, establish clear and uniform clinical outcome metrics, and create transparent mechanisms for monitoring and reporting. This structured approach reduces administrative burdens and minimizes the potential for confusion or disputes. Additionally, the financial impact of warranties may be more beneficial to a manufacturer because of reduced impact on gross-to-net revenue accounting.

These programs also encourage data sharing and real-world evidence collection, which can inform ongoing clinical development and post-market surveillance. This feedback loop enhances the overall value proposition of the drug and supports continuous improvement.

Paving the way for more life-altering patient outcomes

As the pharmaceutical industry continues to evolve, drug assurance programs are becoming essential tools for manufacturers seeking to enhance patient access, differentiate their products, and improve operational efficiency. By reducing payer financial risk, signaling confidence in drug performance, and fostering alignment among stakeholders, these programs help unlock the full potential of innovative therapies.

Article

Three ways pharmaceutical manufacturers benefit from a drug warranty

Reduce payer risk, increase patient access, and strengthen market differentiation with drug warranty programs.

1. Greater patient access by way of increased payer access

Coverage vs. authorization

2. Enhanced go-to-market strategy and product differentiation

3. Greater efficiency and healthcare ecosystem alignment

Paving the way for more life-altering patient outcomes

Our people

Eddie Albers

Related insights

How drug warranties fit into the pharmaceutical puzzle: Healthcare coverage considerations

A high dose of uncertainty: Navigating pharmaceutical tariffs

Breaking down the value of a drug warranty model for a smaller payer

Drug warranties: A spotlight on end payers

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Three ways pharmaceutical manufacturers benefit from a drug warranty

Reduce payer risk, increase patient access, and strengthen market differentiation with drug warranty programs.

1. Greater patient access by way of increased payer access

Coverage vs. authorization

2. Enhanced go-to-market strategy and product differentiation

3. Greater efficiency and healthcare ecosystem alignment

Paving the way for more life-altering patient outcomes

Talk to us

Our people

Eddie Albers

Related insights

How drug warranties fit into the pharmaceutical puzzle: Healthcare coverage considerations

A high dose of uncertainty: Navigating pharmaceutical tariffs

Breaking down the value of a drug warranty model for a smaller payer

Drug warranties: A spotlight on end payers