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New Deals Tie Drug Prices to Outcomes

May 11, 2016 – “Value-backed” deals are becoming more common as Cigna announces contracts that tie the cost of two new cholesterol drugs to how well they work.

Following the announcement by Cigna Corp., Peter Loftus and Anna Wilde Mathews, writing for the Wall Street Journal identified a new trend as insurers react to consumer pressure. With drug prices skyrocketing—up12% to nearly $425 billion in 2015 (following a 13% increase in 2014), customers have become far more vocal, demanding assurances that they are getting what they pay for.

The drugs in question—Praluent and Repatha—are the only two PCSK9 inhibitors on the U.S. market. Both were introduced in 2015 to reduce levels of LDL “bad” cholesterol beyond what can be achieved by statins, a much more well-known class of drugs. Both Praluent and Repatha cost at least $14,000 a year, and Cigna has negotiated an undisclosed discount off the list prices.

That discount could increase if the drugs aren’t able to reduce LDL cholesterol at least as well as it had in clinical trials. Similar deals between AstraZeneca and Express Scripts and between Eli Lilly and Humana reflect increased interest in contracts that allow redress if something “doesn’t work as expected,” especially for medicines that now cost thousands or tens of thousands of dollars a year.

As Paul Hudson, president of AstraZeneca’s U.S. unit said, “More and more in the U.S., people are making choices between a bag of groceries and a medicine, a copay. The long-term sustainability of the industry and our ability to deliver breakthrough medicines requires us to demonstrate value.” Whether or not this amounts to anything more than a “fancy way of rebating” remains to be seen.


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