Thursday, April 23, 2009


As reported by the New York Times today -
Drug Deals Tie Prices to How Well Patients Do

According to New York Times -
"In a deal expected to be announced Thursday, Merck
has agreed to peg what the insurer Cigna
pays for the diabetes
drugs Januvia and Janumet to how well Type
2 diabetes
patients are able to control their blood sugar. "

An interesting concept that has been tried in other countries. Is this the way to go? Could this initiate the effective top down directive that permeates the corporate culture or just another gimmick to bolster sales?

If this practice became common place what might it mean to the pharmaceutical landscape?


  1. This is definately a trend that is taking hold quickly. This is actually a unique agreement. It's actually a reverse performance based pricing scheme. The better that patients do, the less the drug will cost (per patient). It seemed odd at first, but it makes sense if you read the story at the WSJ health blog (partly quoted below):
    Now Merck and Cigna have announced what they’re calling a “performance-based contract” for Merck’s diabetes drug Januvia. But the deal is actually the reverse the pay-for-performance ideal: Merck will get paid less per pill, not more, if the drug works well.

    Under the deal, Cigna will get a discount on the drug if patients’ blood sugar falls. Cigna will get additional discounts if patients faithfully take the drug when they’re supposed to. (These two variables often go together — taking the drug faithfully helps keep blood sugar down.)

    So what this really sounds like is something closer to a volume discount. Patients who adhere to their drug regimen rather than sometimes skipping pills wind up buying more drugs. And when patients buy more drugs, Cigna gets a bigger discount

  2. Patient: Doc, this stuff makes me feel like crap. Is it actually helping me?

    Doctor: Well, no, but if you want to pay less for it you will swallow it as directed.

    Patient: Huh? There are some scary side effects. Should I be concerned that I am opening myself up to those for no good reason?

    Doctor: uhhhhh (long pause) well maybe this will start working and it will save everyone money if you take it. Meanwhile may I offer you something to help with that crappy feeling?

    Like that Nathan?


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