Apr 17, 2018 - Health

The pitfalls of value-based drug deals

A bottle with prescription pills dumped out.

Drug makers support value-based contracts, not price-setting. Photo: MyLoupe / UIG Via Getty Images

"Outcomes-based" or "value-based" contracts for prescription drugs, in which insurers pay for drugs based on how well they work, have not worked in Italy, the Wall Street Journal reports.

Why you'll hear about this again: The Trump administration plans to support more outcomes-based contracts, and the pharmaceutical industry likes the idea. But it likely won't work because "a monopolist isn't going to sign up for a contract that would get her anything less than the monopoly price," Amitabh Chandra, a Harvard economist, said on Twitter this month.

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