Cigna has cracked through another major barrier in the war onescalating prescription drug costs. In anew contract struck with drug makers of cholesterol medications, ithas negotiated price discounts if the medications don’t live up totheir billing.

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Cigna termed the cholesterol agreements “value-based,” with paymentstied to “incentives … linking financial terms to improved customerhealth.” The new pacts come on the heels of similar contracts withmakers of drugs that treat heart disease, diabetes, multiplesclerosis, and hepatitis C.

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In a press release detailing the new deal, Cigna said: “Cigna isthe first health service company to reach value-based agreementsfor its commercial business with both Sanofi/Regeneron and Amgenfor their PCSK9 inhibitor drugs. The contracts are independent ofeach other, but they share the same overall objective. If Cigna'scustomers aren’t able to reduce their LDL-C levels at least as wellas what was experienced in clinical trials, the two pharmaceuticalcompanies will further discount the cost of the drugs. If the drugsmeet or exceed expected LDL-C reduction, the original negotiatedprice remains in place.”

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Meaning: a penalty for not meeting specs, but no bonus forexceeding them.

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Drug makers have resisted such contractual arrangements forobvious reasons. But the national focus on reducing drug spending,coupled with the drive for valued-based health care delivery, hasbeen heating up in the last year as drug makers boosted the pricesof new drugs, existing garden variety drugs, andspecialty drugs. In a sense, the companies hoisted themselves ontheir own petards.

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Cigna said it will not only be looking for evidence of lowercholesterol in patients treated with the drugs, but also “whetherthere are cardiovascular improvements for Cigna customers relatedto their treatment.”

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For Cigna, the cholesterol drug “incentives” pact are but onemore step in its campaign to rein in costs through the contractingprocess with pharmaceutical companies.

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“Pharmaceutical advances hold great promise for improving thehealth of Cigna’s customers, and outcomes-based agreements helpensure that this promise is delivered,” said Cigna Senior VicePresident Christopher Bradbury. “Innovating through the contractingapproach is one way we are helping our customers and clientsreceive more value for their health care dollar.”

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