Monday, July 16, 2007

Merit-Based Payment of Pharmaceutical Treatments

Drug companies are beginning to putting their money where their mouths are — by offering a money-back guarantee. From the NY Times today:

"Johnson & Johnson has proposed that Britain’s national health service pay for the cancer drug Velcade, but only for people who benefit from the medicine, which can cost $48,000 a patient. The company would refund any money spent on patients whose tumors do not shrink sufficiently after a trial treatment.

The groundbreaking proposal, along with less radical pricing experiments in this country and overseas, may signal the pharmaceutical industry’s willingness to edge toward a new pay-for-performance paradigm — in which a drug’s price would be based on how well it worked, and might be adjusted up or down as new evidence came in.

“I think payers will say, ‘If the product works and it creates value, we will reward you for it,’ ” said Anthony Farino, a pharmaceutical industry consultant at PricewaterhouseCoopers. “ ‘If not, we won’t reward you.’ ”

It is far too soon to tell whether such a pricing paradigm can actually work, in particular because it can be difficult in many cases to measure how well a drug is working. And the approach would probably be most feasible in countries, like Britain, where the government is the primary payer."

Rest of the article here.

1 comment:

David Hunter said...

As I've said on the philosophy and bioethics blog I think though this idea is novel, the net result will be more pressure on public health care systems to purchase very non-cost effective treatments. A smart move from the Pharma company, maybe not so good from the public health care systems point of view. It will be difficult for the NHS to resist though given the rhetoric about providing the best possible care for everyone which still prevails in the face of its obvious impossibility.