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Collegium Rallies On 'Value-Based Contract' With Cigna; Here's What It Means

Collegium Rallies On 'Value-Based Contract' With Cigna; Here's What It Means
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Collegium Pharmaceuticals Inc (NASDAQ: COLL) shares jumped more than 13 percent on Thursday after health insurance giant CIGNA Corporation (NYSE: CI) announced it will be discontinuing coverage of Purdue Pharma’s popular opioid painkiller OxyContin. Citing safety concerns about opioid abuse and addiction, CIGNA has opted instead to sign a “value-based contract” with Collegium for its abuse-deterrent oxycodone equivalent drug Xtampza ER.

What Is A Value-Based Contract?

Value-based contracts are one approach to fighting rising drug costs. In value-based agreements, insurers pay for the cost of a drug based on how effective it is. Value-based agreements are a stark contrast to the traditional fee-for-service healthcare agreements that encourage drug volume over drug efficacy.

In an effort to combat over-prescription of Xtampza, Cigna will hold Collegium “financially accountable” for daily prescriptions that exceed a specified threshold.

The U.S. Centers for Disease Control and Prevention estimate opioids played a role in more than 33,000 deaths in 2015 alone. Purdue has been hit with multiple lawsuits accusing the company of using deceptive and unlawful marketing techniques to sell OxyContin that have exacerbated opioid abuse.

Cigna said its customers who are currently using OxyContin for hospice care or cancer treatment will continue to have it covered through 2018. Cigna has set a long-term goal of reducing prescription opioid abuse among its patients by 25 percent by 2019.

“Our focus is on helping customers get the most value from their medications — this means obtaining effective pain relief while also guarding against opioid misuse," said Jon Maesner, Cigna's chief pharmacy officer.

Despite Thursday’s gain, Collegium shares remain down more than 23 percent in 2017.

Related Link: How Much The Opioid Epidemic Actually Costs The Non-User

Posted-In: Opioids oxycodone OxycontinNews Health Care Contracts Movers General Best of Benzinga


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