Drug makers are cutting a new kind of deal with insurers to move their new generation medicines from the shelves – but they are going about it the old-school way.
The Longview News Journal reports that the “money back guarantee,” long used to accompany everyday items such as household appliances and hand tools is proving effective in putting new drugs at the forefront of medical treatments even as insurance firms try to find ways to cut on costs.
These deals negotiated between drug makers and insurers usually involve refunds and even full rebates if the medicine in question does not work as promised.
This doesn’t mean a check in the mail for a patient who suffers a recurrence of cancer, though, but rather another shot at another treatment that an insurer may not normally be willing to pay for. For the part of insurers, wasteful spending is minimized, if not eliminated because they are now able to track a patient’s progress through electronic medical records.
Roger Longman, chief executive at Real Endpoints, an analytics company that caters to the medical market, said that these deals are likely to be part of the solution to escalating drug prices, and other attendant expenses associated with new drugs.
Most of the new generation treatments cost more than $100,000 a year for a treatment course so insurance companies are hesitant to pay for them, especially because their touted benefits have yet to be proven. There is also the added burden of hospital stays and treatments for complications if the drugs don’t work.
Insurers normally restrict access to them by making patients pay more, or making doctors jump through hoops to get approval, sometimes even opting for cheaper alternatives and resorting to these new drugs only after the patient’s health has deteriorated.
With the money back guarantee, insurers are more confident about choosing these drugs. Pharmaceutical companies also benefit from these deals because they get to sell medicines they spent hundreds of millions of dollars or more getting to the market.
The Journal cites new generation injectable cholesterol drugs touted to reduce bad cholesterol in the system. Amgen’s Repatha and Sanofi’s Praluent cost $14,000 per year in treatments, however, conventional pills are said to do as good a job for $300 a year.
As is expected, insurers usually reject prescriptions for these injectables. To boost sales, Amgen is offering full rebates to insurers if patients suffer a heart attack or stroke during the treatment course. Amgen inked a deal with Harvard Pilgrim for the drug while Sanofi signed with Cigna.
“It demonstrates the fact that we are standing behind the value the product has, and we’re willing to put some money behind it,” James Borneman, Sanofi’s head of strategic pricing told the Journal.
The publication reported that insurance firms are now demanding these deals, especially for highly expensive medication and widely used drugs that cost them millions to cover.
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