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  • New England Journal of Medicine

Undermining Value-Based Purchasing — Lessons from the Pharmaceutical Industry

By: Leemore S. Dafny, Christopher Ody and Matt Schmitt
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Abstract

The analogy between value-based purchasing in pharmaceuticals and the new frontier of alternative payment models for health care providers is relatively straightforward. Insurers are increasingly demanding steep discounts from providers in exchange for inclusion in more limited networks or placement on favorable tiers. They will drive hard bargains in locations where alternative providers are available and will use financial incentives for patients in order to deliver volume to providers who meet their criteria. In turn, providers may attempt to circumvent the copayment system by waiving cost sharing for patients, a direct analogue to copayment coupons. For example, some providers have found it profitable to charge prices that keep them out of an insurance plan’s network and then waive cost sharing.

Keywords

Drug Copayment Coupons; Prescription Drug Policy; Health Care and Treatment; Insurance; Cost; Policy; Pharmaceutical Industry

Citation

Dafny, Leemore S., Christopher Ody, and Matt Schmitt. "Undermining Value-Based Purchasing — Lessons from the Pharmaceutical Industry." New England Journal of Medicine 375, no. 21 (November 24, 2016): 2013–2015.
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About The Author

Leemore S. Dafny

General Management
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More from the Authors
  • Cigna-Express Scripts: Can a Vertical Merger Rescue an Industry Under Attack? By: Leemore Dafny
  • Giving a Buck or Making a Buck? Donations by Pharmaceutical Manufacturers to Independent Patient Assistance Charities By: Leemore Dafny, Christopher Ody and Teresa Rokos
  • Two Approaches to Capping Health Care Prices By: Michael E. Chernew, Maximilian J. Pany and Leemore S. Dafny
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