One country is ahead of the curve in striking pay-for-performance deals on cancer drugs--and, more importantly, collecting the cash when treatments don't hit their goals.
That country is Italy, and its money-back guarantees on cancer drugs are sparking interest in the U.S. and elsewhere in Europe, Bloomberg reports. With more drugs fast-tracked through regulatory review, and many approved after preliminary data from small trials, Italy sees those money-back deals as a way to stay on the leading edge of treatment without breaking the bank on drugs that don't work as promised.
The country's medicines regulator had full-refund deals on more than 90 drugs by the end of 2014, up from less than 20 in 2012, Bloomberg says. Last year, it collected about €200 million ($220 million) under those money-back deals.
Italy also uses a strategy payers are studying in the U.S.: reimbursement and contracts that vary by cancer type. One drug might be fully refundable in one type of cancer and only partially rebated in another. The American Society of Clinical Oncology recently unveiled one framework for evaluating drugs cancer-by-cancer, and Express Scripts ($ESRX) says it will experiment with the approach this year.
One difference in Italy is that the medicines agency there established national treatment registries in 2005 to track outcomes from various drugs. This system provides hard data for negotiating agreements and, with results continually coming in, a basis for renegotiating every couple of years. This sort of tracking is an important part of collecting refunds when and if they're due.
As Bloomberg notes, Roche ($RHHBY) has been experimenting in France with tracking patient and treatment outcomes as a step toward more performance-based pricing. It's not easy: The U.K., for one, has had trouble collecting on its few pay-for-performance reimbursement deals, according to a government report. And in the U.S., which lacks any kind of centralized health-records database, money-back deals could be even tougher. Amgen ($AMGN) recently struck a pay-for-performance deal on its PCSK9 cholesterol drug Repatha, but it's with Harvard Pilgrim Health Care, a small regional payer.Novartis CEO Joe Jimenez
Both Roche CEO Severin Schwan and Novartis ($NVS) CEO Joe Jimenez have backed this sort of approach to reimbursement in recent months, and as the top two companies in oncology, their backing could be key to widespread adoption.
Novartis has pushed for performance-based deals on its heart failure drug Entresto--albeit not so successfully--and Jimenez recently told the French newspaper Le Temps that "money-back" pricing and other deals are "a way forward" through the pressure of rising drug prices. "The pharmaceutical industry will have to provide new approaches to pricing that will eliminate waste," Jimenez said.
- see the Bloomberg story
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