|Express Scripts CMO Steve Miller|
Pay for performance is a byword in executive pay. It's not unprecedented in pharma, what with European cost watchdogs and their hard line against pricey cancer meds. But it's not part of the drug-coverage equation in the U.S.--for now.
As The Wall Street Journal reports, Express Scripts ($ESRX) is trying to peg the cost of some cancer drugs to the results they deliver. It's looking at drugs approved for a variety of different cancer types, with payments based on how well the treatments work in each indication.
As Express Scripts CMO Steve Miller told the Journal, that means the cost of a drug like Roche's ($RHHBY) Tarceva would be higher in a cancer where it has delivered better survival data--in Tarceva's case, lung cancer--compared with another type where its survival advantage is smaller. For Tarceva, that would be pancreatic cancer; in one trial, Tarceva prolonged pancreatic cancer patients' lives by a median of less than two weeks compared with placebo, the WSJ notes.
It's not the first time the idea has come up. In a Journal of the American Medical Association article last year, frequent pricing critic Peter Bach suggested that paying by indication could save money in cancer. He used the example of Eli Lilly's ($LLY) Erbitux, which is much less effective in advanced head and neck cancer compared with colorectal cancer. Its $10,320 price in the latter would drop to $470 in the former, Bach suggested.
Drugmakers have struck performance-based pricing deals with payers in Europe. In England, for instance, the National Institute for Health and Care Excellence (NICE) has set up money-back arrangements on meds such as Velcade, the Johnson & Johnson ($JNJ) treatment for multiple myeloma. In some cases, drugmakers foot the bill for a first round of treatment, and if patients respond, the National Health Service picks up the tab from there. In others, the NHS is due rebates if the therapy falls short.
As the WSJ notes, some U.S. payers have negotiated pay-for-performance deals, too. Cigna ($CI) has tied reimbursement for Merck KGaA's multiple sclerosis drug Rebif and Merck & Co.'s ($MRK) diabetes med Januvia to patient outcomes.
Keeping track of results and collecting on those guarantees has been a bureaucratic mess, however. Setting up deals based upon trial data and indication would remove the need to account for pricing after the fact.
That doesn't mean administering such an approach would be easy, however, particularly in the U.S., where health records aren't consolidated in one place as they are in state-run health systems. As a Roche spokeswoman told the WSJ, the company has set up one indication-based pricing deal in Italy already--and would welcome the idea of differentiated pricing in the States--but the records hurdle is just one obstacle to implementation.
Lilly also told the WSJ that it's "exploring alternative options to accurately represent the value our medicines offer across multiple indications."
- read the WSJ piece
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