If It Doesn’t Work, You Don’t Pay: Big Pharma Edging Toward Pay For “Pillformanceâ€
According to the New York Times, major drug firms are experimenting with a new model where they are offering British health authorities the following guarantee: “If the pill doesn’t work you don’t pay.â€Â Specifically:
“Johnson & Johnson has proposed that Britain’s national health service pay for the cancer drug Velcade, but only for people who benefit from the medicine, which can cost $48,000 a patient. The company would refund any money spent on patients whose tumors do not shrink sufficiently after a trial treatment.â€
Recognizing that the old argument, “our drugs are worth it because they are medical breakthroughs†is not holding water with many stakeholders, pharma companies are starting to look for other ways to prove the value of their medicines.
Right now it is unknown whether this flexible approach will work in the United States, as insurers are under regulatory pressure to reimburse Food and Drug Administration approved medicines. However, in countries where price controls and other system-wide mechanisms to control costs are the norm, risk sharing may be one way to prompt stingy payers to green light expensive medicines.
From a communications perspective, price guarantees are the ultimate dealmaker, and if successful, could work in countries where patients pay for most medicines out of pocket. After all, it’s much easier to get someone to pay for a pricey pill if they know that they’ll get their money back if it does not work.
However, despite the appeal of risk sharing it remains to be seen how widespread “pay for pillformance will become.”
July 19th, 2007 at 9:50 am
Obviously, this is feasible only when results can be objectively monitored, as with tumor size, etc. But I like the concept.
Paul White