|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
Traditionally, the discounts that drug companies offer
insurers are based upon how much a drug is used, and not how well it
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
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,"
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, www.CIGNA.com/index.html. Merck & Co., Inc.,One Merck Drive P.O. Box 100, Whitehouse Station, NJ 08889-0100; (908) 423-1000, www.merck.com.