A Netflix-model for drug pricing? Plus, Morgan Stanley hires a chief medical exec and CVS ups its game against Amazon

It’s a 21st century conundrum. The number of people with hepatitis C, an infectious disease spread in part by sharing needles and sexual contact, is rising. The cure exists. But the public agencies on the hook for covering these kinds of medications can’t afford to pay for the life-saving therapy.

So, Louisiana is proposing a plan to contract with a drugmaker in a Netflix-style, subscription-based payment model that would trade a set price in exchange for hepatitis C (HCV) treatment for the roughly 70,000 Louisianians infected with the liver disease.

Surprising, Gilead Sciences, maker of HCV drugs like Epclusa and Harvoni, favors this model, and its support underscores demand for new ways to pay for medications with stubbornly high prices.

That’s why a Utah insurer is sending employees to Mexico to buy their medicines, President Trump is proposing a restructuring of Medicare Part B medication reimbursement, and UnitedHealthcare will give people hundreds of dollars in prepaid cards if they pick the cheaper version of a drug. (And these are just the examples that have been announced in the last week.)

Drugmakers argue that innovation, like a cure, has a price tag. But public payers like Medicaid and commercial insurers alike say they can’t keep paying for drugs that cost what they do today.

And that may be the primary reason why a pharmaceutical company like Gilead, which has generated billions of dollars in sales from its blockbuster hepatitis-C portfolio, would consider a payment model that could potentially cut into future revenue. However, sales of HCV drugs have been declining as more patients undergo the curative treatment, and competition from other pharmaceutical companies has helped drive down prices.

“It might seem that drug corporations would rather just bide their time, and charge the most they could,” Dr. Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, wrote in JAMA this week. “But these corporations are aware of their future revenue prospects.”

Even so, not everyone agrees with this model. UnitedHealthcare argued in public comments that a subscription model is more likely to be feasible in countries like Australia than in the U.S.

What’s your take? Could a Netflix-style payment model work in health care? Share your thoughts in the comments, using #TheCheckup.

News I’m Watching

1. Investors buy into clinical staffing startups. IntelyCare, which markets a health care staffing tool for post-acute care settings, on Thursday announced $10.8 million in funding. This follows $12 million in funding in February for Nomad Health, an online marketplace for health care jobs, and NurseGrid’s $5.7 million round in January. Why does this matter? As shortages of doctors and nurses worsen, it has become increasingly competitive for health care organizations to hire and retain clinical talent.

2. CVS Pharmacy tests a subscription service for medications in Boston. The pharmacy chain launched CarePass, a $5-a-month pilot program that offers members free delivery on most drugs and store purchases, plus access to a pharmacist hotline. Now that Amazon has acquired medication-delivery startup PillPack, that has put more pressure on legacy pharmacy chains like CVS to find new ways to provide value to patients who are increasingly insistent on having Amazon-like health care experiences.

3. Walmart gets into accountable care in Louisiana. The retail giant is partnering directly with Ochsner Health System on an accountable care plan for 6,600 of its regional employees in New Orleans and Baton Rouge, according to The Times-Picayune. It’s the eleventh partnership of this kind for Walmart. Employers, long worried about rising health care costs for employees, are turning to unlikely partnerships and new payment models to cut down on what they spend.

Healthcare’s Revolving Door

Morgan Stanley tapped Dr. David Stark as its first-ever chief medical officer, making it the latest company to bring in senior medical talent to help address rising employee health costs, reports Business Insider. Stark most recently was the medical director of the Institute for Next Generation Healthcare at the Icahn School of Medicine at Mount Sinai in New York.

This week, Julie Kliger, a registered nurse and managing director with Alvarez & Marsal, is weighing in on the items featured in #TheCheckup that caught her eye. Join her in the conversation below.

A Netflix-style fix for drug pricing, investors eye the opportunity in nurse and doctor shortages, and Morgan Stanley gets into the employee health care game.

What's your take on this week’s stories? Share your thoughts in the comments.