Some drugmakers -- encouraged by health insurers -- have begun linking the prices of their medications to the drugs' efficacy, the New York Times reports. According to some experts, the strategy could be a positive shift toward pay-for-performance care rather than fee-for-service treatment. The practice "in theory" would unify the goal of insurers, drugmakers and employers that offer worker health coverage toward improving people's health, the Times reports. According to the Times, nationalized health systems in other countries in the past few years began using pay-for-performance contracts as a method of reducing costs and promoting cost-effective treatments.

The Times profiled two examples of the agreements in the U.S. In one, Procter & Gamble and Sanofi-Aventis -- which jointly market the osteoporosis drug Actonel -- last week agreed to reimburse Health Alliance for costs related to beneficiaries' broken bones while taking Actonel, while Health Alliance will charge patients a lower copayment for Actonel than for Boniva, a competing brand-name drug.

Under the deal, if a Health Alliance policyholder who is correctly taking Actonel experiences a nonspinal fracture, the drugmakers will pay for the policyholder's medical care related to the break. Dan Hecht, general manager of the North American pharmaceutical business of Procter & Gamble, said, "We're standing behind our product," adding, "We're willing to put our money where our mouth is." While the agreement will lower costs for Health Alliance, the deal also "could reduce the pressure" on Health Alliance to switch patients from Actonel, which costs about $100 monthly, to less-costly generic version of the drug.

In another deal, Merck on Thursday is expected to announce an agreement with CIGNA to align what the insurer pays for its diabetes treatments Januvia and Janumet with how well type 2 diabetes patients are able to control their blood sugar. Under the agreement, Merck will give CIGNA larger discounts on the two drugs. Some of the discounts are linked to whether patients take the drugs as prescribed. According to the Times, the agreement could reduce the number of complications and increase sales because patients would no longer be skipping or reducing dosages. According to the Times, it is assumed that CIGNA will advocate for patient-compliance programs that encourage people to take their medications at the proper times and dosages. In addition, CIGNA will charge a lower copay for Januvia and Janumet than for some other brand-name drugs.

CIGNA will receive larger discounts from Merck on the two drugs if patients' blood sugar is better controlled, regardless of whether patients' improved health is directly related to Januvia or Janumet. According to the Times, Merck hopes that its treatments are proven more effective and that CIGNA's desire to take advantage of the two drugs' discounts will result in the insurer attempting to keep its beneficiaries on the drug.

CIGNA Pharmacy Management President Eric Elliott said the company plans to reach similar deals with other drugmakers. He said, "We wanted a contract that drives performance," adding, "Getting this one out will provide more momentum" (Pollack, New York Times, 4/23).

Reprinted with kind permission from kaisernetwork. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at kaisernetwork/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork, a free service of The Henry J. Kaiser Family Foundation.

© 2009 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

View drug information on Actonel; Boniva; Januvia.