Every bronze medal winner knows that moving from third place to gold requires a strategy for overtaking No. 1 and 2. For Olympian Carl Lewis, improving from a bronze medal at the 1979 Pan Am games to gold at the 1984 Summer Olympics required an intense plan that increased his long jump from 8.13 meters to 8.3 meters. Sometimes gold is won or lost on the strength of those plans, and slight improvements earn you victory.
The same can be true in the pharmaceutical industry. For a few drug companies, an important marketing plan component has been a stop at CIGNA HealthCare and the insurer's use of outcomes-based contracting. In recent years, the nation's fifth-largest health insurance company has become a key partner for drugs that rank No. 3 in their class or condition through contracts that reward compliance or reduced costs.
Three years ago, CIGNA inked a deal with Merck & Co. over diabetes drug Januvia. Merck's therapy ranks as third best-selling diabetes medication after Lantus and Actos (although all three have very different mechanisms). Looking for a way to give Januvia an edge in competing against these other oral therapies, Merck reached a deal with CIGNA that would reward the insurer for customers who were compliant with their diabetes medication (regardless of the brand). Compliance increased, and just as importantly, Januvia was able to position itself as a forward-looking brand.
Earlier this year, CIGNA reached a similar deal with EMD Serono's Rebif. Under this contract, CIGNA and EMD Serono are focusing on significant relapses for beneficiaries with multiple sclerosis. These relapses can be financial hits for an insurance company, requiring seven days of hospitalization at a cost of up to $11,000. Interestingly, Rebif is the No. 3 selling MS drug and No. 2 best-selling beta-interferon-1a therapy after Avonex. While Rebif doesn't have some of the features that patients favor (tolerability, less frequent dosing), EMD Serono has found a way to improve patient share by partnering with large MCOs based on the drug's strengths (outcomes). Specific details of the CIGNA-EMD Serono arrangement have not been released, but they likely involve payments for reducing hospitalizations.
As these agreements show, CIGNA has become the go-to partner for outcomes-based contracts, particularly for those drugs that do not lead their drug class or are new entrants. Because of its integrated medical, pharmacy and disability approach, CIGNA can implement such an arrangement and measure its efficacy. However, CIGNA isn't Béla Károlyi. It's not the only carrier that possesses these skills and other carriers should look at this model.
This latest announcement has us thinking who is missing out on outcomes-based deals. Although traditional marketing and outreach campaigns still have their roles, outcomes-based contracting tells the payer world that your drug is so strong that you're willing to risk your money on it.
Potential insurer partners should have an internal pharmacy benefit manager and a national size to implement this program, meaning Humana, UnitedHealthcare and possibly Aetna (depending on how it's running its PBM after the CVS deal) would make good partners.
For the drugs, we looked at the third-largest-selling drugs for a particular condition or drug class. We came away with Abbott Laboratories. Humira for inflammatory bowel disease and Boehringer Ingelheim's Spiriva for asthma and COPD. These drugs are strong performers today, but could benefit from outcomes-based contracts with payers that differentiate themselves from competitors.