Patients, payers and providers are all concerned about increases in the price of prescription drugs, whether they are generics, brand-name or specialty drugs. Crazy price hikes and Congressional hearings have drawn attention to the issue. Late last year, the Healthcare Supply Chain Association urged Congress to implement measures to mitigate generic drug price spikes.
Recently, the American College of Physicians weighed in with its own set of recommendations. “The United States often pays more than other high-income countries for the same drugs, and despite discounts, rebates, coupons, and assistance programs, high and increasing drug prices still threaten to keep patients from getting the drugs they need,” write the authors of “Stemming the Escalating Cost of Prescription Drugs,” an ACP position paper published in the July 5 issue of the Annals of Internal Medicine.
“Through collaboration and innovation, stakeholders have the ability to affect change by supporting transparency in how drugs are priced, developing and piloting novel approaches to evaluate and pay for drugs through evidence-based practices that reward advancements in the medical field, assuring access to needed prescription medication by not placing disproportionate economic burden on patients, encouraging informed patient participation in their health care decision-making, and ensuring a truly competitive marketplace,” the authors write.
Commercial payer Cigna Corp. must have been reading the College’s mind, as it announced in mid-May its decision to sign “value-based contracts” with two manufacturers of cholesterol-lowering drugs. The contracts – signed with Amgen and Sanofi/Regeneron – modify the cost of the PCSK9 inhibitors Repatha™ and Praluent® based on how well customers respond to the medications, “aligning incentives by linking financial terms to improved customer health,” says Cigna.
A good idea 10 years ago, outcomes-based purchasing for medical devices and pharmaceuticals is coming of age.
Cigna’s contracts with the two drug companies are independent of each other, “but they share the same overall objective,” the company says. “If Cigna’s customers aren’t able to reduce their LDL-C levels at least as well as what was experienced in clinical trials, the two pharmaceutical companies will further discount the cost of the drugs. If the drugs meet or exceed expected LDL-C reduction, the original negotiated price remains in place.
“Pharmaceutical advances hold great promise for improving the health of Cigna’s customers, and outcomes-based agreements help ensure that this promise is delivered,” Christopher Bradbury, senior vice president, integrated clinical and specialty drug solutions for Cigna Pharmacy Management, was quoted as saying. “Innovating through the contracting approach is one way we are helping our customers and clients receive more value for their health care dollar.”
Contracts such as these couldn’t be signed without today’s sophisticated information systems – themselves a dream 10 or 15 years ago. And the possibilities are exciting.
By analyzing integrated medical and pharmacy claim data, for example, Cigna intends to determine whether there are cardiovascular improvements beyond reduction in their cholesterol levels for Cigna customers related to their treatment with the new medications.
Including the agreements with Sanofi/Regeneron and Amgen, Cigna now has value-based contracts in place with pharmaceutical companies covering medications for cholesterol, heart failure, diabetes, multiple sclerosis, and hepatitis C.
True, the devil is probably in the details of such value-based contracts… and who would know that better than the contracting executives who read this magazine? Still, they offer providers some pushback to uncontrolled price hikes.