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Pfizer Proposes Pay-for-Performance

Thursday, 19 Jul 2007 | 3:41 PM ET

Pfizer's

"pay-for-performance" policy -- which essentially amounts to a money-back guarantee to pharmaceutical users and healthcare payers -- will be a boon for pharmaceutical companies, Catherine Arnold, director at Credit Suisse, said on "Power Lunch."

"The drug industries are saying, 'Let's do something that's more creative,' and that actually puts them on the right side of a dissatisfied customer," Arnold said.

Anthony Farino, consultant at PriceWaterhouseCoopers Pharmaceutical Industry, agrees with Arnold, but feels drug companies need to work harder to explain and market their drugs' benefits in conjunctions with specific diseases.

"Drug companies who are able to start with a much more robust understanding of an underlying disease ... develop a therapy to target that disease state, and develop mechanisms to begin to understand how the drug interacts, prevents, or arrests a particular disease state, and can demonstrate that to a payer," Farino said.

Using Results To Price Drugs
Debating if drugmakers should offer users and health-care payers a "money back guarantee," with Tony Farino, PWC Pharmaceutical Practice head; Catherine Arnold, Credit-Suisse sr. pharmaceutical analyst; and CNBC's Erin Burnett

Pfizer's

Arnold said pay-for-performance will work in areas where access to a certain drug is limited or areas with smaller populations.

She said using the pay-for-performance policy too broadly would set the drug companies up for price erosion.

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