Pay-for-Performance That May Actually Work

Some drug companies are negotiating discounts and rebates based how well patients do, rather than on volume:

Merck has agreed to peg what the insurer Cigna pays for the diabetes drugs Januvia and Janumet to how well Type 2 diabetes patients are able to control their blood sugar…… the two companies that jointly sell the osteoporosis drug Actonel agreed to reimburse the insurer Health Alliance for the costs of treating fractures suffered by patients taking that medicine.

Comments (4)

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  1. Neil H. says:

    If, as you showed in a previous post, drugs work only about half the time for major categories of chronic illnesses, this could radically change the market for drugs.

  2. Vicki says:

    This is a great idea. I wish all drugs were sold this way.

  3. Nancy says:

    I agree with Vicki. What’s wrong with a money back guarantee?

  4. Linda Gorman says:

    Suppose you have two drugs. One generates a small improvement in almost all patients. The other generates a very large improvement in 10% of patients. No one can predict who will respond to either drug as the biological mechanisms are not well understood.

    Which drug will your insurance company prefer that you try given these arrangements and the rebate structure described above? Which drug would you prefer to try? Given finite research funds, in which treatment pathway should research funds be invested?

    Just a few reasons why centrally controlled health care is a disaster…