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Home / News & IndustryManaged Care Insight and Analysis
Updated: September 1, 2009
Groundbreaking P4P Contract Links CIGNA, Merck, In Effort To Control Type 2 Diabetes

Health insurer CIGNA, and drug-maker Merck, have created a unique P4P incentive contract that ties the price of drugs to medical outcomes.

Traditionally, the discounts that drug companies offer insurers are based upon how much a drug is used, and not how well it performs.

The deal is being called the first of its kind in the United States.

In a combined effort to achieve better health results for customers and reduce future medical costs, Merck is is providing discount incentives to CIGNA on its anti-diabetes medications, Januvia andJanumet.

CIGNA said its programs are aimed at helping individuals take their medications appropriately to stop the drastic effects of the disease's progression. Through the company's medicine adherence program, hospitalization and emergency room expenses have been driven down for diabetes patients by 24 percent, said Eric Elliot, president of CIGNA Pharmacy Management.

If CIGNA patients are taking the anti-diabetic drugs as prescribed by their physician, Merck will offer increased discounts, the health plan said. If patients are also able to lower their blood sugar levels, the discounts will be extended. However, customers can improve their glucose levels using any drug, and not just the drugs provided by Merck through its contract.

P4P models are growing as a way to control or reduce healthcare costs, but much of this movement has been centered on the physicians and not the drug makers.

"The alignment is exactly the kind of innovation that supports the ultimate goal of better health for the patient. Our primary goal should be aligning incentives so that the result is a healthier individual," said Cyndy Nayor, president and CEO of the Center for Health Value Innovation, a Missouri-based nonprofit.

CIGNA will benefit from this agreement by paying less for the drugs and hopefully having healthier customers. Merck will benefit by selling more pills and being able to sell its diabetes pills at lower co-pays to customers.

"Improving people's health comes first for both CIGNA and Merck. We hope this agreement will become a model in the industry," said Elliot.

However few if any P4P contracts currently exist between insurance companies and drug makers. Nayer says the industry has been slow to develop them because they are complicated and represent a new way of doing business for all industries involved. "You can't turn a business model upside down overnight," she said. "I don't think Wall Street would be too happy with that."

Addresses: CIGNA Corporate Headquarters, Two Liberty Place 1601 Chestnut Street, Philadelphia, PA 19192; (215) 761-1000, Merck & Co., Inc.,One Merck Drive P.O. Box 100, Whitehouse Station, NJ 08889-0100; (908) 423-1000,

  This article was taken from:
Pay-For-Performance Reporter

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