Drugs Could Soon Come With a Money-Back Guarantee

In late June, Susan DeVore asked an auditorium filled with medical-industry executives if any would be willing to link the prices of the drugs and devices they sell to how well those products work. DeVore, whose company, Premier, helps 3,400 U.S. hospitals make purchasing decisions, recalls seeing about a half-dozen hands go up. “I think it’s a little bit scary for them,” she says. But it’s a question they should get used to hearing, she adds. “Health systems and physicians are more interested in it today than they’ve ever been.”

The government and private insurers have been trying for years to move away from the fee-for-service system that pays doctors and hospitals based on the volume of tests they perform and treatments they prescribe. They want to replace it with contracts that reward quality and better outcomes. Medicare, the federal insurance program for seniors, plans to make half its payments through such arrangements by 2018.