Medications in Texas May Soon Be Given With Money-Back Guarantees

Pharmaceutical companies are beginning to act like many other for-profit organizations by offering money-back guarantees on their medications. Companies like Johnson & Johnson and United Healthcare are introducing “joint venture” programs to governments with universal single-payer health care systems, as well as to private health insurance companies in the United States.

The joint venture agreements began to gain international attention with the commercialization of the cancer drug Velcade, marketed generically as bortezomib. A British advisory board originally ruled against administration of the drug due to cost-effectiveness concerns, even though it had been approved to treat relapses of bone marrow cancer of multiple myeloma. The board ruled that the drug’s results, relative to its overall costs, were simply not worth it. A group of women diagnosed with the disease, known as the Yorkshire Three, protested the decision and took the government to court, forcing the board to reconsider. Johnson & Johnson subsequently proposed the joint venture arrangement as a means of bringing Velcade to market.

“If we didn’t go into the JV scheme, we really wouldn’t have a market here in the UK,” said Pete Smith, UK manager at Biogen Idec. Under Johnson & Johnson’s proposal, all patients would be eligible to receive four cycles, at a cost of $ 24,000 per patient. If the tumors shrunk enough, measurable by a blood test, treatment would Insurance Backed Guarantee  continue, usually for another four cycles, and the national health service would pay. If the tumors did not shrink, the treatment would stop and the government would get its money back.

These deals could have huge benefits for states like Texas, with an overloaded health care system and more than 25% of its population without any health insurance. Risk-sharing strategies can eventually lower the costs of certain treatments, thereby reducing risks for health insurers and, in turn, making coverage more affordable. It can also bring relief to cities like Austin, Dallas, and Houston that are struggling to find ways to pay the costs of treating all those without coverage who come from rural areas to seek treatment.

However infallible these ideas may seem, the proposal still has its flaws. The British government and Johnson-Cilag, the unit negotiating the deal for the drug company, disagree on what precisely constitutes a “sufficient” contraction. The British government wants to designate profitability as a “partial response”, measurable as a 50% reduction in a particular protein produced by tumors. Johnson-Cilag argues that a “minor response,” or a 25% reduction in protein, is sufficient to constitute continuous treatments. Other complications come into play when experts argue that some patients show only a minimal response after four cycles, but then achieve a complete remission due to continued administration of the drug.…