Could 'pay-for-performance' be coming to a prescription drug near you?
- In light of what many are beginning to view as out-of-control drug pricing practices, payers are starting to look for guarantees that high-cost medications work in real-world settings.
- Some payers, such as UnitedHealth Group and Humana, have already negotiated pay-for-performance deals with drugmakers.
- One major problem for drugmakers is that if patients are noncompliant—and many are—then the drugs won't work properly, thus hampering companies' ability to demonstrate performance.
When confronted with $1,000-per-pill hepatitis C treatments, or $14,000-per-year treatments for hypercholesterolemia, or high-priced medical devices designed to reduce occlusions, many payers balk, as do many physicians, hospitals, and patients. But the promise of pharmaceutical products signficantly improving quality and/or quantity of life brings to bear questions about the value of life, of disease-free progression, and more.
With respect to performance-based pricing, Humana has been an activist of sorts, negotiating a total of 13 agreements so far implementing pay-for-performance contracts for drugs covering numerous therapeutic areas, including cancer, multiple sclerosis, diabetes, and other diseases.
But how about that compliance issue? It's a real problem and happens to be the number one complaint among physicians. In an article written for the New England Journal of Medicine in 2005, Dr. Lars Osterberg and Dr. Terrence Blaschke wrote explored non-compliance and non-adherence from all angles. They found that more than 50% of patients either don't take prescribed medications, or take them incorrectly. Unfortunately, those stats are no better 10 years later despite numerous attempts to raise awareness and address this issue.
So as part of a solution, some technology companies, such as Qualcomm, are developing ways to track medication compliance using a combination of software and sensors to monitor overall adherence to healthcare regimens, including taking medication, according to Bloomberg. But what does this mean for companies trying to negotiate with payers? Likely, what it always has—negotiating prices on a case-by-case basis.