- Express Scripts, the largest pharmacy benefits manager in the U.S., is pushing a policy known as "indication-based pricing," under which insurers would pay different amounts based on the therapeutic outcomes of drugs. This policy would be especially impactful for pricing cancer drugs, which often have numerous indications.
- Express Scripts is in the process of negotiating with various drug manufacturers to imlement differentiated pricing as a policy. Currently, the general modus operandi is to pay the same per-unit rate for a cancer drug regardless of indication.
- In response, drug companies have been coming up with counter-proposals based on their own pricing models, such as offering free doses during a trial period.
In an article published in the WSJ, Dr. Steve Miller, Chief Medical Officer of Express Scripts, used Tarceva (co-marketed by Roche and Astellas) as an example of how one drug can have vastly different levels of effectiveness for different therapeutic indications. In the case of Tarceva, which costs roughly $6,850 per month per patient, clinical tirals have shown that it increased median survival in pancreatic cancer patients by less than two weeks, compared with placebo. In contrast, Tarceva prolongs median survival in lung cancer patientt by roughly 3.5 months, compared with chemotherapy.
Drug pricing continues to be a sticky wicket for a number of reasons, including the fact that the payer and reimbursement system is so fragmented, which allows pharma companies to negotiate different deals with different payers, mainly through the rebate system.
Another issue is the challenge of tracking patient response. While it makes sense in many cases to use clinical trial data to gauge a drug's effectiveness for various therapeutic purposes, there are other situations where pay-for-performace would involve tracking various health metrics, such as blood sugar levels in diabetic patients.
In certain cases, some drug companies are offering free run-in trials of their medications in case a drug does not work for a particular patient. For example, Accorda Therapeutics' multiple sclerosis drug, Ampyra, only works in about 40% of patients. Therefore, the company grants two free months of the drug to determine whether or not it will work. If it does, then the company starts to charge for the drug.
Negoatiations are ongoing, and Express Scripts is planning to start implementing its pay-for-performance policy at some point next year.