Drug warranties latest effort to rein in prices

Assurances that new pharmaceuticals work aim at better outcomes.

TRENTON, N.J. — Warranties and money-back guarantees, long used to entice buyers of products such as hand tools and kitchen gadgets, are now being used to sell something more crucial: pricey new- generation drugs for diseases such as rheumatoid arthritis and cancer.

Deals being negotiated between drugmakers and the insurers who buy medicines now sometimes include extra rebates — or even full refunds — if drugs don’t help patients as expected.

It’s part of an effort driven by insurers and government health programs to align the cost of care with the quality of care, and slow the relentless growth of prescription drug costs.

“We’re spending less money on drugs that are less effective,” said Dr. Michael Sherman, chief medical officer for the not-forprofit insurer Harvard Pilgrim, which has several of these deals and is negotiating more. Sherman says one-fourth of every dollar it spends on patient care goes to prescription drugs.

For t he pat i e nt , i t doe s n’ t mean a check in the mail if cancer comes back after a round of treatment. But it does mean patients could get a drug that might help them and for which an insurer might otherwise be unwilling to pay. And insurers, who now can track how patients fare through electronic medi- c al records, will be reducing wasteful spending and making at least a dent in overall health care costs.

The cost of many new drugs now tops $100,000 per year or course of treatment, even though their benefits are unclear or only marginally better than cheaper, older drugs. Buyers of those new drugs, usually insurance companies, are hesitant to pay without assurance the drugs will help patients. Not only is that bad for patients, it makes insurers spend even more on complications and hospital stays if the drugs don’t work.

As a re s u l t , i nsu re r s o f t e n restrict access to expensive new drugs. Sometimes that’s achieved by making patients pay more out of their own pockets, or making doctors wade through red tape to get authorization for a patient’s medicine. Sometimes patients have to try cheaper drugs first, and only when they fail — and the patients’ health has deteriorated — are they allowed to get the pricey new drug.

Pharmaceutic al companies have an incentive here, too: These deals may help them sell more of the new drug they’ve spent hundreds of millions of dollars or more developing.

So Amgen, trying to boost disappointing sales for a drug expected to be a huge seller, is offering full refunds to insurers if patients have a heart attack or stroke while taking its drug. On Tuesday, Amgen announced its first deal to do so, with Harvard Pilgrim. Sanofi has a contract with insurer Cigna to pay extra rebates if patient cholesterol doesn’t fall as much as expected.