Cigna has cracked through another major barrier in the war on escalating prescription drug costs. In a new contract struck with drug makers of cholesterol medications, it has negotiated price discounts if the medications don’t live up to their billing.
Cigna termed the cholesterol agreements “value-based,” with payments tied to “incentives … linking financial terms to improved customer health.” The new pacts come on the heels of similar contracts with makers of drugs that treat heart disease, diabetes, multiple sclerosis, and hepatitis C.
In a press release detailing the new deal, Cigna said: “Cigna is the first health service company to reach value-based agreements for its commercial business with both Sanofi/Regeneron and Amgen for their PCSK9 inhibitor drugs. The contracts are independent of each other, but they share the same overall objective. If Cigna's customers aren’t able to reduce their LDL-C levels at least as well as what was experienced in clinical trials, the two pharmaceutical companies will further discount the cost of the drugs. If the drugs meet or exceed expected LDL-C reduction, the original negotiated price remains in place.”
Meaning: a penalty for not meeting specs, but no bonus for exceeding them.
Drug makers have resisted such contractual arrangements for obvious reasons. But the national focus on reducing drug spending, coupled with the drive for valued-based health care delivery, has been heating up in the last year as drug makers boosted the prices of new drugs, existing garden variety drugs, and specialty drugs. In a sense, the companies hoisted themselves on their own petards.
Cigna said it will not only be looking for evidence of lower cholesterol in patients treated with the drugs, but also “whether there are cardiovascular improvements for Cigna customers related to their treatment.”
For Cigna, the cholesterol drug “incentives” pact are but one more step in its campaign to rein in costs through the contracting process with pharmaceutical companies.
“Pharmaceutical advances hold great promise for improving the health of Cigna’s customers, and outcomes-based agreements help ensure that this promise is delivered,” said Cigna Senior Vice President Christopher Bradbury. “Innovating through the contracting approach is one way we are helping our customers and clients receive more value for their health care dollar.”
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
