A Value-Based HealthcareSystem could well be the game-changer implemented with a mindset to help people live longer and healthier lives. How much does mediation cost? You probably don’t realize how expensive it can get if you don’t know. And even though insurance coverage has become more common, some medications still aren’t covered.
There are many reasons why medication costs are so high, such as the pharmaceutical companies’ marketing campaigns or the government negotiating prices for certain drugs.
What is value-based pricing?
Value-Based Healthcare Pricing is a system in which drugmakers give discounts to doctors who use certain drugs more often — thus rewarding doctors who prescribe more appropriate medications.
Pfizer offers value-based contracts to approximately one million prescribers nationwide. Among the rewards offered under this program include:
• $100 discount per patient enrolled in the plan
• An incentive payment of up to $1,000 per member annually based on adherence rates
• A commitment to providing ongoing education about prescribing practices to improve outcomes
• Support for continuing medical education seminars and practice improvement programs.
The goal of these contracts is to increase overall health care quality while reducing total healthcare costs.
The current system leaves critical health needs unmet.
If you look at any individual policy, you won’t be able to see precisely which medicines are included. Instead, the insurer provides a list of generic names and a description of each drug’s coverage status. For instance, an insurer might say that a specific antibiotic is excluded from coverage or that diabetes medications are only partially covered.
A recent study found that these lists were often incomplete or misleading. Researchers noticed that they couldn’t identify all of the drugs contained in a single plan until they searched online. That’s because insurers typically leave off information about generics and brand-name versions of the same medication.
Even after you’ve uncovered the full range of options, getting the proper treatment will require careful planning. As we explain later in this guide, even though a medication costs $100 per month, filling the prescription could add up to hundreds more dollars once you factor in copays, deductibles, and coinsurance.
But before we can help you figure out which drugs should be on your formulary, we first need to understand why some medications are so expensive. This section explains how the pharmaceutical industry sets prices and outlines the different types of rebates and discounts offered by manufacturers.
Understanding how drugs are priced can help you avoid unnecessary costs. For example, you may be surprised to learn that many high-priced antihistamines are quite similar in chemical structure to over-the-counter sleep aids. And while most insurance companies recognize the difference, they don’t always cover both forms of medicine.
Value-based pricing would better serve the public
value-based healthcare model pricing would best serve the public by encouraging manufacturers to focus their efforts on providing safe, effective medicines and devices that improve people’s quality of life, rather than spending resources on developing new drugs that offer little value.
For instance, consider the case of Lyrica®(pregabalin), an anticonvulsant that treats pain, anxiety, and insomnia associated with fibromyalgia. While Lyrica was initially developed as a generic version of gabapentin (Neurontin®), the two drugs share a similar chemical structure.
In 2002, Pfizer acquired Neurontin rights from Warner-Lambert for $3 billion. Subsequently, Pfizer introduced Lyrica under the name Lypril® and began aggressively promoting the drug as a replacement for Neurontin.
Lyrica became very popular among health insurers because it was one of the few drugs available to treat fibromyalgia symptoms. However, studies showed that Lyrica wasn’t any more effective than existing therapies for this condition. As a result, some critics argued that Pfizer had exaggerated the benefits of the drug to increase sales.
In 2005, after several years of heavy promotion, Lyrica finally received FDA approval. Despite solid evidence suggesting that patients were not gaining significant benefit from the drug, Pfizer continued to promote Lyrica as a treatment for fibromyalgia and other chronic pain conditions.
As a result, the drug now commands up to four times the list price. And since many insurance companies only cover brand-name medications, patients are left with limited options.
Similarly, another study found that heart attack and stroke risk were nearly equal between pregabalin and a placebo. This suggests that pregabalin doesn’t offer much additional protection over currently available alternatives.
But Pfizer continues to promote it as a miracle cure vigorously. It also spends millions of dollars every year sponsoring events like golf tournaments.
Today, many Americans feel powerless when faced with excessive prescription costs. If your local pharmacy won’t negotiate prices, you can contact your insurer or pharmacist to see if there is another way to obtain affordable medication. Often, if the problem persists, consumers have no choice but to switch pharmacies.
If cost isn’t your primary concern, ask yourself whether you need the new medication. Consider alternative treatments such as lifestyle changes, herbal remedies, acupuncture, or physical therapy. Or perhaps you could try using complementary methods instead.
If you find yourself unable to afford the medicine you need, speak to your doctor about lowering the dosage or switching to less expensive generics.
It’s important to note that while most pharmaceutical products are patented, they don’t always stay protected for long — especially if their effectiveness becomes apparent.
For example, Wyeth (now owned by Pfizer) initially marketed the antidepressant Effexor® (venlafaxine HCI) as an anti-anxiety medication before discovering its antidepressant properties. Likewise, Pfizer has been selling Viagra® (sildenafil citrate) as a treatment for erectile dysfunction and a weight loss aid.
While patents help protect manufacturers against the competition, they also expose them to reduced profit potential. In short, patents on medicines become temporary monopolies that allow the manufacturer to charge whatever people will pay.
The good news is that these situations rarely lead to abuse. Most physicians, pharmacists, and other healthcare providers are committed to providing quality care at reasonable prices.
How can value-based pricing realign incentives to improve health?
A Value-Based Care System Rewards Quality
Value-based reimbursement systems can reward doctors whose patients live longer lives with fewer complications. This is because high-quality outcomes benefit everyone involved: patients receive better care, insurers earn lower costs, and hospitals get paid for treating healthy individuals rather than sick patients.
By definition, value-based care focuses on maintaining quality control over services directly affecting health. It encourages doctors to seek out newer therapies, research studies, and interventions that produce superior results.
There are several ways that value-based reimbursement systems can encourage doctors to focus on preventive care. For starters, it provides financial incentives to physicians who choose healthier options. These include preventative measures like regular exercise, quitting smoking, eating a diet low in saturated fat, getting recommended sleep, and taking prescribed medication.
These same programs could also discourage doctors from performing procedures like knee replacements or coronary artery bypass surgeries when they aren’t necessary. And because value-based care plans are designed to reward high-quality outcomes, they offer physicians an incentive to avoid doing something that might cause unnecessary harm.
There’s no question that most doctors want to do what’s suitable for their patients. But there are many forces — including cost-sharing requirements, regulations, and lack of time — that keep them from caring as much as they should. In contrast, value-based care creates an environment where doctors feel empowered to practice medicine without concern for profits.
The Bottom Line
While some healthcare reform initiatives may seem promising, the truth is that any meaningful legislation would require a massive overhaul of our current health insurance structure. As things stand, we do not have enough data to know what works best. For now, the only thing Americans can do is make educated decisions based on all available information. And remember, even if you buy your insurance policies from private companies, you’re still covered by Medicare and Medicaid — two government programs that are far too big to fail.