“Pay for response” model for drug payment and consequences

An Op-Ed by Sam Waksal in the New York Times (March 7,2012) suggests a pay for response model for drug payments, where the measurable impact of drugs would trigger payments. The author claims that such payment schemes would incent drug companies to invest in understanding when drugs do not work and incentivize targeting drugs to specific patient characteristics. But will such schemes decrease overall drug costs or increase payments from patients who experience successful outcomes ? Who should decide on which measurements determine success, the drug company, the health insurer or the FDA ? Given such payment schemes, will patients not assured of good outcomes be denied the probability of cure ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Service Operations, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

One Response to “Pay for response” model for drug payment and consequences

  1. This kind of idea sets off all sorts of alarms, and I think there is one big problem. You have to set a baseline price for each drug otherwise a doctor can just throw everything at you and see if something sticks. You could also prescribe a very inexpensive drug along with a very expensive drug and claim the inexpensive one was responsible for curing you. How do you deal with interaction effects of drugs? What about drugs that sustain people and do not have a before/after effect? Lots of disturbing questions arise from this, especially since the author of the Op-Ed has spent time in jail convicted of fraud and obstruction…

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