[Pharmwaste] Pay for Performance for Drugs?

[Charlotte A. Smith]

Never thought I'd see the day....could have an impact on prescribing and
disposal habits downstream, literally and figuratively.

 

Kaiser Daily Health Policy Report

Prescription Drugs | Pay-for-Performance Model Being Applied to Drug
Makers in Europe, U.S.

[Oct 12, 2007] 

      Prescription drug makers are creating pay-for-performance
contracts with European state-run health care systems in an effort to
"overcome" the systems' "increasing stinginess about paying for new
drugs," the Wall Street Journal reports. According to the Journal, a
rapid increase in drug prices over the past decade has increased the
demand on drug companies to be held accountable for the claims they
make. 

In Europe, some government-run health systems have established strict
criteria for including drugs on their formularies, including reviews of
cost effectiveness. If a health system decides not to pay for a
treatment, the drug can effectively be locked out of the market. The
Journal reports, "That frugality has led to flat or declining sales in
Europe for many drug companies." Drug companies are offering such
pay-for-performance deals rather than lowering drug prices "in part
because they are fearful of setting precedents that would cause
insurance payers worldwide to demand price cuts," according to the
Journal. 

For example, British officials last year declined to pay for the Johnson
& Johnson <http://www.jnj.com/home.htm>  blood cancer drug Velcade
because it was not determined to be cost effective. In response, J&J
offered to reimburse the country's national health service for
treatments that were ineffective with cash or replacement doses. The
deal is expected to begin later this month. France also has developed a
pay-for-performance agreement with J&J and the country's health care
service said it has discussed such an agreement with GlaxoSmithKline
<http://www.gsk.com/> . 

However, such agreements have raised questions about how to determine
whether a drug is ineffective in a patient and merits reimbursement. In
the U.S., Cigna <http://www.cigna.com/>  and Aetna
<http://www.aetna.com/index.htm>  are pursuing pay-for-performance
programs with drug makers. 

Ed Pezalla, national medical director for Aetna Pharmacy Management
<http://www.aetnapharmacy.com/AP/ihtAP/r.WSIHW000/st.35261/t.35261.html>
, said, "I think there is definitely potential for (pay for performance)
in the U.S. as pharmaceutical companies recognize they may want to take
some responsibility for the claims they make on their medications." 

However, the Journal reports that it would be difficult to change U.S.
pricing policies because many drug companies already offer discounts and
rebates based on sales volume. Thom Stambaugh, chief pharmacy officer
for Cigna, said the company has been asking cholesterol drug
manufacturers to reimburse the insurer if a patient taking the drugs
correctly still has a heart attack. No drug maker has agreed to such a
proposal. Stambaugh said, "We want them to put their money where their
mouth is" (Whalen, Wall Street Journal, 10/11). 

 

 

 

 

 

 

Charlotte A. Smith, R. Ph., M.S., HEM

President

PharmEcology Associates, LLC

200 S. Executive Drive, Suite 101

Brookfield, WI 53005

414-292-3959

Cell 414-915-4026

Fax 414-479-9941

csmith at pharmecology.com

www.pharmecology.com

H2E Champion for Change Award Winner

 

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