Johnson & Johnson Proposes Money-Back Guarantee For Cancer Medication

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The New York Timeson Saturday examined pay-for-performance pricing systems andrisk-sharing experiments in the U.S. and abroad for high-costprescription drugs. Under a proposed arrangement between the Johnson & Johnson unit Janssen-Cilagand Britain's national health service, the government agency would payfor the company's cancer drug Velcade "only for people who benefit fromthe medicine."

Initially, an advisory board decided that Velcade-- approved to treat relapses of multiple myeloma, a bone marrow cancer-- was not cost effective and that it should not be covered by thenational health service. Patient groups and the company won an appealof the decision and the government agency was forced to reconsidercoverage of the treatment. J&J then proposed the program as a wayto have the treatment designated as cost effective.

Under theproposal, all patients would be eligible for four cycles of treatment,which cost about $24,000. If the tumors appear to shrink, as determinedby a blood test, treatment would continue and the health service wouldcover the cost. If tumors do not shrink, treatment with Velcade wouldstop and the company would reimburse the government for money spent onthe drug. However, the company and government disagree on how much thetumors must shrink for the drug to be considered beneficial. GlaxoSmithKlinesays it has reached similar agreements with two European nations,although the company would not disclose which countries or drugs wereinvolved.

According to the Times, such proposals"may signal the pharmaceutical industry's willingness to edge toward anew pay-for-performance paradigm -- in which a drug's price would bebased on how well it worked and might be adjusted up or down as newevidence came in." However, "[i]t is far too soon to tell whether sucha pricing paradigm can actually work, in particular because it can bedifficult in many cases to measure how well a drug is working," and the"approach would probably be most feasible in countries, like Britain,where the government is the primary payer," the Times reports.

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U.S. Programs

Lee Newcomer, senior vice president for oncology at United Healthcare,said such "risk-sharing" deals would be difficult to reach in the U.S.because there is "no way we could ask for it and have any leverage." Headded that state regulations and marketplace pressures make it verydifficult for a U.S. insurer to deny coverage for a drug approved by FDA, regardless of cost.

However, United Healthcare is trying a risk-sharing experiment with Genomic Health,involving a test that helps determine whether a woman with early stagebreast cancer would benefit from chemotherapy. Under the agreement, theinsurer will pay for the test for 18 months, while Genomic monitors howmany women still receive chemotherapy after the test suggests they donot need such treatment, according to Newcomer. Genomic will lower theprice of the test if it does not have the intended impact on actualmedical practice, according to the Times.

Newcomersaid, "The point is to try to make the manufacturer responsible for howtheir product is used in the medical marketplace."

Meanwhile, Sean Tunis, a former chief medical officer of CMS and director of the not-for-profit Center for Medical Technology Policy,said he was asked by a U.S. biotechnology company for his opinion onwhether to offer a money-back plan on a new cancer drug. "I and otherssuggested a money-back guarantee on a cancer drug looked silly," hesaid, adding, "'Oh, I'm sorry your grandma died. Here's your moneyback'" (Pollack, New York Times, 7/14).

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Reprinted with permission from kaisernetwork\t\t\t\t\t\t\t

Reprinted with permission fromkaisernetwork.org.You can view the entire KaiserDaily Health Policy Report, search the archives, andsign up for email delivery at kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published forkaisernetwork.org,a free service of The Henry J. Kaiser Family Foundation.

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