Harvard Pilgrim Health Care will get its money back on members who have a heart attack or stroke after they've been taking an expensive new cholesterol-lowering drug for at least six months. Amgen, which makes the drug, Repatha, says this is the first time a pharmaceutical manufacturer has signed a contract that guarantees a full refund for drugs that do not meet expectations.
"We want to stand behind the value of our products," said Dr. Joshua Ofman, Amgen's senior vice president of global access and policy. "We want to put skin in the game. We think by partnering with payers we can improve the ability for high-risk patients to get access to the products they need."
Here's the backstory. Insurers balked at paying for Repatha after it was approved in 2015. At $14,000 a year, Repatha is almost 50 times the cost of many generic cholesterol drugs. One study concluded that the price of Repatha would have to drop to $4,536 a year to be cost effective. Interest in the drug increased after a study funded by Amgen showed that patients on Repatha had a 15 to 20 percent lower risk for heart attacks, strokes and death. But analysts expected stronger results.
Many doctors continue to question the drug's cost and say they need more research to help determine which patients Repatha will help.
"There are absolutely groups of individuals where this medicine is particularly helpful," said Dr. Pradeep Natarajan, a preventive cardiologist at Massachusetts General Hospital, "but, broadly, it doesn't make sense at the current price."
Amid ongoing concerns about the cost of Repatha, Amgen said it would pledge money back guarantees. The first such deal is with Harvard Pilgrim, which called the contract "groundbreaking."
"Given that there is a huge concern about balancing cost and effectiveness, because we're worried about affordability for our members, we're entering into agreements that tie the payment for a pharmaceutical to its ultimate effectiveness," said Dr. Michael Sherman, Harvard Pilgrim's chief medical officer.
Sherman says he hopes this money back guarantee will become a model for even more expensive, personalized drugs in the works to treat cancer.
"We don't want to let costs be a barrier to those who need them the most. But we need to deal with the issue of affordability because these drugs tend to be priced for success," Sherman said. "I hope that other pharma companies will take note of this and think about it as part of their strategy."
Sherman says a refund would include any out-of-pocket costs a member has paid for Repatha. Harvard Pilgrim would calculate the member's share and issue the refund.
"That seems like a bad deal, especially if I'm dead," said David Mitchell, president of Patients for Affordable Drugs.
Mitchell is not impressed with the money back guarantee. He says the FDA is supposed to determine if drugs are effective, not insurers. And he says the contract will not help patients.
"This is not an arrangement that meets the needs of patients. It is an arrangement that allows the drug companies to maintain their high prices and claim that they’re doing something to address those prices when in fact they’re not," Mitchell said.
Insurers say holding drug makers accountable, and recouping money when drugs don't work, will save consumers money. Pharmaceuticals are one of the fastest rising costs in health care. Experts say so-called value-based pricing for pharmaceuticals could help hold down costs, but there's no guarantee.
There's one piece of this agreement that doesn't make sense to me. Harvard Pilgrim says there no limit on the length of time over which the insurer can demand a refund. A patient might be on Repatha three years, five years or longer. It seems like Amgen would want to cap its liability, but I guess that's an issue for future contracts.
This segment aired on May 3, 2017.