Pay only for drugs that work

Here’s a radical proposition for you: Americans should only have to pay for drugs that work. Should I sign up for a drug regimen some day for advanced melanoma that costs at least $100,000, I think asking for a money-back guarantee is only fair. To cut waste from the healthcare system, there should be financial rewards for the drug companies to develop products that actually work. If they don’t, then patients and their insurance companies should pay nothing.

I would add that a new drug for stage-four melanoma patients that extends life (on average) by a few weeks should not be lauded as a big success. So should Bristol-Myers Squibb be enriched $2 billion/year for risking their capital to develop Yervoy? That’s how things stand right now. I’m outraged that Americans spend $2.6 trillion a year on healthcare—far more than any other country—and we have no better medical outcomes to show for it. Cancer drugs are a prime example of the wretched excess that drives this monster. Patients who take $100,000 cancer drugs are not the rare exceptions you might think. This pricing structure is obscene, and ultimately unsustainable.

Writing in the New York Times, Samuel Waksal notes that simply capping or slashing the price of drugs is not the answer: “Individuals and insurance companies should be willing to pay—and pay a lot—for drugs when they work. The problem is we’re also paying for drugs when they don’t. To cut costs from the system and create an incentive for drug developers to deliver more innovative new drugs, this is what has to change.”

If my kitchen sink springs a leak and I have a plumber out to fix it, he won’t be paid if he doesn’t repair the problem. Furthermore, he wouldn’t expect payment for doing work that fails. Who does, when you stop to think about it?

In the medical world, if I were to take Yervoy and then survived for at least a year, I would be willing to pay generously for it (along with my insurance company). I would pay more if it could be determined that Yervoy was responsible for extending my life by more than, say, two years. In light of the terrible side-effects of Yervoy, it’s ludicrous to think that anyone should have to pay for this drug when it doesn’t work—which, as it turns out, Yervoy often doesn’t. To be inflicted first with cancer, then with harsh treatment and finally with the failure of that treatment is horrific to consider. Under this scenario, it’s grossly unjust for the company that makes the treatment drug to walk away $100,000 richer.

I have no beef with drug companies making a profit. In fact, I want them to so they can continue to fund their R&D. But the perverse incentives that reward companies for failure must change. I’ve never heard of a cancer patient with insurance turn down a marginally effective drug because of its high price. They often don't even know what their treatment costs. So don’t expect the cancer lobby to work for this type of payment reform. This is the sort of change that only begins when cranks like me repeat an idea that may be far-fetched, but that is so obviously righteous. It’s totally fair to hold Big Pharma to a pay-for-response model that would help curb runaway healthcare costs.