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(Reuters) - Medtronic Plc said on Monday it signed an agreement with health insurer Aetna Inc under which payment for its insulin pump systems will be tied to how well diabetes patients fare after switching from multiple daily insulin injections.
The deal is the latest example of the move toward contracts for prescription drugs and medical devices that attempt to bring down soaring healthcare costs by tying reimbursements to whether the products achieve their intended results.
The deal with Aetna will measure health outcomes for patients who transition to one of three Medtronic pumps that self-adjust to keep blood sugar levels in proper range based on patients' individual needs for insulin.
"This agreement reinforces our shift towards value-based healthcare," Hooman Hakami, president of the Medtronic diabetes group, said in a statement. "We know technology alone isn't enough and ultimately improved outcomes are what matter."
Patients with type 1 diabetes and those with type 2 who have progressed to the need for insulin typically check blood sugar levels several times a day and inject insulin as needed. The pumps eliminate that chore.
Medtronic declined to discuss financial details of the Aetna agreement, but said such deals tie revenue to achievement of clinical improvement targets, as well as shared savings for delivering on or exceeding clinical outcomes and cost targets.
Suzanne Winter, vice president of the Medtronic diabetes group in the Americas, said the Aetna agreement will initially focus on whether patients on its pumps achieve their A1c targets, a commonly used measure of blood sugar levels. The American Diabetes Association recommends A1c levels below 7.
In the future it may look at other measures, such as hypoglycemia episodes, time in proper glycemic range, and patient satisfaction, Winter said.
Medtronic already has an agreement with UnitedHealth Group Inc that is moving toward including patient outcomes and other metrics, such as total cost of care, and the company is discussing similar deals with other insurers, Winter said.
Pharmaceutical companies are also beginning to embrace reimbursement options that take patient outcomes into consideration.
U.S. biotech Amgen Inc, in an effort to improve patient access to its expensive new cholesterol drug Repatha, has offered contract options that include refunding the cost of the drug if patients suffer a heart attack or stroke while on the medicine intended to prevent them.
Reporting by Bill Berkrot; Editing by David Gregorio