Health insurers seek closer link between drug prices and efficacy

Cigna Corp. may receive additional price discounts from pharmaceutical companies should new cholesterol medications prove less effective than expected — a move marks a crucial step in a broader initiative to link the cost of medications to their efficacy.

The push is becoming more prevalent as consumers demand more assurance that the exorbitant amount of money they are spending on their medications is actually warranted.

“When pharmaceutical companies stand behind the performance of their drugs through value-based contracts, we can deliver the most value to Cigna's customers and clients for the money they are spending,” Christopher Bradbury, SVP, integrated clinical and specialty drug solutions for Cigna Pharmacy Management, told American Pharmacy News. “Value-based contracts align incentives on metrics demonstrating health improvements for dollars spent.” 

In 2015, prescription spending increased by 12 percent to almost $425 billion. The previous year, there was a 13 percent increase in prescription spending, according to IMS Health.

Cigna stated in a recent announcement that it will be the first insurer to apply the value-based contracts for a new class of cholesterol drugs known as PCSK9 Inhibitors, of which Praluent, co-marketed by Sanofi SA and Regeneron Pharmaceuticals Inc., and Repatha, produced by Amgen Inc., are the only two cholesterol-lowering drugs in the class currently on the U.S. market.

The two drugs were introduced in 2015 to lower LDL cholesterol, otherwise known as “bad cholesterol,” more effectively than medications in an older class of drugs known as satins.

Praluent and Repatha cost at least $14,000 a year; however, Cigna arranged an undisclosed discount with the drugs’ marketers.

If patients insured by Cigna take either drug and their cholesterol levels don’t drop as well as advertised and shown in clinical trials, additional discounts will be applied to the cost of the drugs. Should the drugs meet or exceed expectations, the original negotiated price will continue to apply.

Harvard Pilgrim Health Care and Express Scripts Holding Co. are among at least a dozen insurers that have signed value-based contracts with pharmaceuticals.

Bradbury said greater accountability helps to control overall costs in the health care system, which benefits everyone — even people who are not taking medication.

“There is also tremendous value in the real world insights obtained from value-based contracts that benefit multiple stakeholders,” he said.

When asked how value-based contracts help save money, Bradbury said for starters, both manufacturers offer “very competitive discounts.”

“In addition, Amgen and Sanofi/Regeneron have demonstrated a commitment to stand by the effectiveness of their PCSK9 inhibitors in a real world setting based on outcomes,” he said. “We are anticipating positive results, but 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.”

David Whitrap, senior director of corporate communications for Express Scripts, told American Pharmacy that the company recently signed a value-based contract with AstraZeneca.  

“Through this contract, if patients do not persist on AZ’s [cancer] drug Iressa for more than two prescription fills, than the manufacturer refunds some of the money back to the plan sponsor who paid for it,” he said.