Merck leads the way to U.S. cost-sharing

Okay, pharma: How confident are you? Insurers may soon be asking you that very question. That's because Merck has inked a deal with Cigna that pegs the cost of its diabetes meds Januvia and Janumet to their performance. Cigna will pay according to how well the drugs help its Type 2 diabetes patients control their blood sugar. A U.K.-style pay-for-performance pricing scheme! And we didn't even need NICE to get it.

Merck execs are either relying on faith, or on some fancy statistic-crunching mathematical model. We suspect it's the latter, with a bit of faith thrown in. And the company isn't stepping into completely virgin territory. Johnson & Johnson started the trend when the U.K.'s National Institute for Health and Clinical Excellence balked at the cost of its cancer treatment Velcade. To get NICE's okay, J&J proposed a money-back guarantee. Other cost-sharing deals with NICE followed; for instance, Celgene announced today that the drugs watchdog has accepted its cancer med Revlimid--and its offer to pay for treatment longer than 26 cycles.

Meanwhile, back in the U.S., Merck has agreed to give Cigna bigger discounts on the diabetes drugs if patients follow through by taking the meds as prescribed, the New York Times reports. Even bigger discounts come if patients' blood sugar is better controlled. Of course, patient compliance means more filled scrips, and the discounts for performance are a carrot for Cigna to steer folks toward the Merck drugs. Plus, Cigna's formulary will be revised to offer a lower co-pay for Januvia and its sister.

Expect more cost-sharing deals to follow here as in the U.K. "We're going to see a growth in outcomes guarantees for pharmaceuticals, and it's very healthy," Robert Seidman, former chief pharmacy officer for WellPoint, told the Times.

- see the Celgene release
- check out the NYT story

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