Drugmakers Eating Costs? (Fat Chance)

DECEMBER 12, 2016 – THE LATEST PAY-FOR-PERFORMANCE ARRANGEMENTS BETWEEN BIG PHARMA AND PBMS ARE TIED TO EXCLUSIVE OR PREFERRED-PROVIDER STATUS. BUT HOW WILL THEY AFFECT YOUR EMPLOYEES?

A new type of pay-for-performance agreement (what a notion!) has insurers and self-funded employers wondering if all of a sudden Big Pharma is starting to play fair. Adam Rubenfire, writing for Crain’s Chicago Business, notes that “In most of these deals, insurers agree to offer reimbursement for a set price as long as the drugmaker agrees to pay a penalty if certain metrics aren’t met.”

“Payers say the deals give them assurance that they won’t be left holding the bag if a drug doesn’t deliver its promised medical benefit. Drugmakers are willing to go along because it helps get their products to more patients more quickly.” As such, the arrangements have become popular for drugs that treat conditions like diabetes, hepatitis C, and heart disease, where biomarkers can be used for benchmarking.

The author is quick to note, however, that drug manufacturers also like these new deals because they don’t have to compromise on the price of new drugs, which often come to market at significantly higher costs than older medications for the same condition. Of course, these arrangements are often tied to exclusive or preferred-provider status, meaning that older, more cost-effective alternatives could be sidelined.

Another fly in the ointment is non-adherence – if patients aren’t taking the drugs properly, everyone loses. Indeed, in order to facilitate these agreements, payers are using predictive modeling to determine which patients are most likely to be nonadherent and targeting those patients through mobile apps and other communications in order to remind them to take their medications.

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Read the rest of Adam Rubenfire’s excellent article here: 

Would drug makers eat costs when their products don’t deliver?