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Proving The Value Of Value-Based Deals

 
• By Ed Silverman

As controversy continues over pharmaceutical pricing, more drugmakers are eyeing deals that peg health plan cost to outcomes to boost volume and win formulary placement. But these deals are challenging to construct and to date there is little evidence that they reduce costs for patients.

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Several times a month, Michael Sherman, MD, gets a call from someone curious about his deal-making. Sherman is not a venture capitalist or head of technology transfer at a university, though. He is chief medical officer at Harvard Pilgrim Health Care Inc., which is the second largest health insurer in New England. But his willingness to embrace a controversial approach in the US toward negotiating with drugmakers has placed him at the center of a growing debate over the value of prescription medicines.

Over the past two years, he has inked half a dozen outcomes-based contracts with drug companies, making Harvard Pilgrim something...

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