If costly drugs don't work, prices go down

Increasingly, the mind-blowing cost of biologic drugs is straining the healthcare system, with some hitting unheard of levels of $100,000 per year or more. Not sure how to cope with the cost of these drugs, some health plans have begun asking patients to pay larger portions of the cost.

Now, drugmakers and insurers are trying some new approaches as well. In an effort to keep interest in high in such drugs, and deflect the toughest criticisms on price, Johnson & Johnson is proposing to give a huge price break on its cancer drug Velcade, which can cost $48,000 a patient. Under a new proposal, Britain's national health services will pay for the drug only if it shrinks tumors sufficiently after a trial treatment. In another British experiment, four multiple sclerosis drug makers have agreed to lower prices if the drugs don't work as hoped. GlaxoSmithKline has made similar agreements with two unnamed European governments addressing as-yet unnamed drugs.

Unfortunately, critics say, it's unlikely such "risk sharing" deals are likely to work on a large scale in the United States, as no individual health plan has the leverage a government health system has. That hasn't stopped insurers from trying. In one case, UnitedHealthcare has managed to strike such a deal. It's agreed to pay the cost of a $3,460 genetic test for 18 months. The test is designed to determine whether women with early-stage breast cancer would benefit from chemotherapy. If too many women end up getting chemotherapy despite the test suggesting it wasn't needed, UnitedHealthcare expects to be able to negotiate a lower price for the test.

Perhaps the most groundbreaking approach to this risk-sharing notion comes from Cigna, which is trying to convince makers of cholesterol-lowering pills like Lipitor to pay patient medical expenses if the patients have a heart attack despite taking their medication.

To learn more about similar deals by other insurers:
- read this piece in The New York Times

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