Some Drug Makers Are Linking Price to Performance

Yesterday, the NY Times reported that some drug makers will tie drug price to performance (http://www.nytimes.com/2009/04/23/business/23cigna.html?_r=1&scp=1&sq=drug%20price%20for%20performance&st=cse). This is not something new. In countries which have some leverage with big pharma because the government provides nationalized healthcare and has the power to stop payment if the drug doesn’t work well, it is customary to tie price to performance. Yes, these are the very same drugs that we use and no, ours aren’t better. The drug makers Proctor and Gamble and Sofanti Aventis, makers of the osteoporosis drug, Actonel, agreed to pay Health Alliance for costs to treat fractures that occurred in patients while on the drug. In return, Health Alliance will charge patients lower co-payments for Actonel than for the competing brand, Boniva.

In another deal, Merch agreed to give CIGNA larger discounts on the two diabetic drugs, Januvia and Janumet, if the patients are able to better control their blood sugar. 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. 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.

With healthcare reform on the horizon, there are more and more players coming to the table to help lower costs, because they fear nationalized health insurance. Big pharma realizes that drug prices will plummet if the U.S. initiates universal healthcare allowing the government to negotiate drug prices similar to other countries like Great Brittain and Canada. In fact, you don’t have to go so far to see such differences in prices. If you compare the price of drugs under the VA Healthcare system (which negotiates drug prices) with that of Medicare Part D (which is non-negotiated), the VA costs are about 57% less. If you are wondering why Medicare Part D is non-negotiable, just look at the number of dollars big pharma gives to our politicians. They’ve been bought off at the expense of our healthcare!

There is no doubt that we can do much better with nationalized healthcare. There is plenty of profit that is built into the system that would more than cover healthcare costs. Call you Congressman and urge them to fight for your right to affordable healthcare!

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