Trump may promote "value-based" drug pricing

AP file photo

Trump administration officials are having a meeting today to bat around some ideas for executive actions they can take on drug prices, as Jonathan Swan reported last night. And one idea has emerged that will make health care nerds very happy, Bloomberg reports: The White House might promote value-based pricing, in which insurers pay for drugs based on how well they work on specific diseases and patients.

Why it matters: That's actually an idea that wouldn't get a big fight from the pharmaceutical industry. The Pharmaceutical Research and Manufacturers of America has been pushing for legislative and regulatory changes to make it easier to promote those kinds of arrangements. But without legislative changes, the Trump administration may have to settle for using them only in federal programs, like Medicare Part D.

Before you get too excited: Research published yesterday in the New England Journal of Medicine throws some cold water on the promise of value-based purchasing, at least in hospitals. Hospitals that are part of the program — which conditions some of their Medicare payments on a complex set of performance metrics — don't seem to perform any better than hospitals that aren't, according to the NEJM article.

The bottom line: Both groups of hospitals have improved since value-based purchasing took effect, but at about the same rate.

But there may be some valuable lessons here. The NEJM authors noted that another, somewhat similar ACA policy — penalties for hospitals that readmit a lot of patients — seem to be working pretty well. That program might be more effective because it's simpler, the authors said, and because it uses penalties instead of bonuses.