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Pay-for-Performance: Italy Refunds Patients if Their Drugs Don’t Work

Most products you buy come with some sort of guarantee that they’ll fulfill their function – flights landing safely at their destination, food alleviating hunger, etc. – so why shouldn’t the same logic be applied to medicine?

That’s how Italy sees it, with its state-run health service asking pharmaceutical companies for money-back guarantees if their drugs don’t work. Last year, it collected over $300 million in refunds.

This makes a lot of sense, of course, when you consider that pharmaceutical companies pay participants for clinical trials. If cancer patients, for example, are being prescribed drugs that may or may not work, it’s reasonable to enact a policy that prevents spending tens of thousands of dollars a month on the premise of mere hope.

Italy’s health registry has been tracking treatments and outcomes over the past decade and uses the data for its pay-for-performance deals with pharma companies. Drug companies themselves are fine with the arrangement as well, since they can avoid expensive, large-scale trials before seeing if a drug is fit for the market.

“In oncology, you would be foolish as a manufacturer to go into Italy without one of these schemes,” Robert Dumitrescu, a consultant to drugmakers at Simon-Kucher & Partners, told Bloomberg.

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Italy’s model is now being examined by other European countries – most notably France and England – and there’s plenty of incentive for Canada to consider such a system as well. It could save provincial governments millions of dollars that are wasted on covering ineffective drugs, which in turn could be spent on financing medication that would otherwise be delisted on the basis of astronomical cost.

Cancer drugs are especially in focus because of their high cost and experimental nature. According to the IMS Institute for Healthcare Informatics, global spending on cancer drugs is set to rise to $100 billion in 2018, up from $65 billion in 2013 – to force that financial burden on national health services and patients themselves would be very American.

A.k.a., a very terrible healthcare model.


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