The Wall Street Journal has a fascinating story today (New Push Ties Cost of Drugs to How Well They Work) about tiered pricing for drugs by indication. The idea would be to pay more for certain indications where a drug is particularly effective and less for others where it’s less so. Eventually the concept could be applied to specific individuals, and not just indications.
It’s not a bad idea –I’ve advocated for a similar, software licensing model in the past– but I don’t expect it to catch on in a big way.
I was struck by one paragraph in particular:
A spokeswoman for Roche’s Genentech unit said that when Tarceva was approved to treat pancreatic cancer in 2005, it was the first medicine approved for the disease in more than a decade. She said the drug is now rarely used to treat pancreatic cancer because other drugs have since been approved for the disease. She said Genentech would welcome a system of pricing a medicine based on how it performs in different indications—and has one in place in Italy—but there are challenges to doing so in the U.S., including fragmented patient-record systems. (emphasis mine)
It’s often been said that there is no US healthcare “system.” The lack of a system is very expensive in terms of administrative burden, uncoordinated care, and poor outcomes. This drug pricing issue is just one more example of how we’re kidding ourselves if we think US healthcare is so superior to others’. In fact it helps explain why we pay so much more and yet get less.