And You Thought Biotech Was Risky
This article was originally published in Start Up
Given the enormous proposed market caps on drugstore.com's and PlanetRx's IPOs, you could be forgiven for inferring that the Internet pharmacies are as close to a real business as anything to come out of Silicon Valley's dream factory. But you'd be wrong. Risks abound. And one big problem is access to reimbursed patients. Drugstore.com's costly deal with Rite Aid shows just how much the Internet pharmacy was willing to pay, both in terms of dilution and strategic flexibility, to get a solid connection with patients who have drug benefits.
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Merck and UnitedHealth's Optum group have partnered to explore various value constructs.
Although stakeholders are interested in value-based models that link a drug’s performance to emerging evidence of improved patient outcomes, such agreements are difficult to implement and too limited in scope to drive a shift to value-based reimbursement. The authors suggest a new, structured approach to bring these contracts into the mainstream, thus transforming product reimbursement and fueling the shift from volume to value.