Prescription medication pay for performance, and the rationale behind it

Are drug companies putting money where their mouths are?

In a new trend, the pharmaceutical industry is offering what the NY Times calls, “money-back guarantees,” essentially paying for treatments if their drug fails.

For instance, the makers of the osteoporosis drug Actonel will pay “$30,000 for a hip fracture . . and $6,000 for a wrist fracture,” if a patient taking their drug suffers those conditions.

In another example, drug maker Merck is offering Cigna patients greater discounts on their diabetes medication Januvia, by offering it on a lower tier. The hope is that Cigna will find its costs reduced from Januvia’s efficacy, and Merck will benefit from more of their drug being used.

These are sly ways to keep patients from choosing generic substitute, or in Januvia’s case, a generic alternative. Also, these bonuses and discounts only apply to specific insurance companies. So, if a patient switches from Cigna to another insurer, it is likely that Januvia will jump to a higher tier.

Merrill Goozner has a more skeptical take, calling the tactics “a minor price discount that brings the price of the drug only slightly more in line with its true value.”


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