New Twist on Drugs -- Pay-for-Performance

With all the drugs out there and all the claims on TV and in other ads, wouldn’t it be nice if you could pay only if the drug delivered promised results? Pay for Lipitor, for example, only if it dropped your cholesterol level by 30% or pony up for a pain reducer only if it actually reduced your pain significantly. And, then there are these extremely expensive drugs for major debilitating diseases where no one is sure whether or not they work. The idea that you would pay only if a drug actually delivered as promised is a very sexy idea.

With all the drugs out there and all the claims on TV and in other ads, wouldn’t it be nice if you could pay only if the drug delivered promised results?   Pay for Lipitor, for example, only if it dropped your cholesterol level by 30% or pony up for a pain reducer only if it actually reduced your pain significantly.   And, then there are these extremely expensive drugs for major debilitating diseases where no one is sure whether or not they work.  The idea that you would pay only if a drug actually delivered as promised is a very sexy idea.

 

The idea is not that far out there.  It is already happening in Europe where increasingly the major pharmas are being forced into pay-for-performance contracts.  That is the case for Johnson and Johnson and Sanofi in Britain and soon to be the case for GlaxoSmithKline in France.  Others will clearly follow. 

 

It is also being explored by Aetna here in the States.   They are playing with a number of models, one of which would review a drug’s performance for a large group of users.

 

It is something clearly that is coming down the road, and it isn’t going to be a windfall for the pharmas.  In each case so far, they not only have to agree to pay-for-performance, but they also have to reduce their prices.     

 

I for one hope it happens on a large scale soon.  It is time the pharmas have to deliver results, not just pretty looking pills.

Harry Greenleaf
Harry Greenleaf: Harold Greenleaf, BA, UCLA; MBA, UCLA is an independent financial consultant in Los Angeles. Please feel free to reach out with any questions on my articles at hgreenleaf@aol.com.

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