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Health insurer Cigna Corp. will get extra price discounts from drugmakers if new cholesterol medications don’t help patients as much as expected, a significant step in a broader push to tie the cost of drugs to how well they work. Such “value-based” deals are becoming more common as rising costs spur customers to demand assurances they are getting what they pay for. U.S. prescription spending rose 12% to nearly $425 billion in 2015, following a 13% increase in 2014, according to research firm IMS Health. Cigna is set to announce on Wednesday that it is the first insurer to reach value-based contracts for an entire new class of cholesterol drugs: Praluent, which is co-marketed by Sanofi SA and Regeneron Pharmaceuticals Inc., and Amgen Inc.’s Repatha are the only two cholesterol-lowering drugs known as PCSK9 inhibitors currently on the U.S. market. (Loftus and Wilde Mathews, 5/11)

Federal prosecutors are investigating drugmakers’ contracts with companies that manage prescription benefits in the U.S., the latest sign of government scrutiny of how drug companies and industry middlemen do business. The U.S. attorney’s office for the Southern District of New York has sent demands for information to at least three drug companies: Johnson & Johnson, Merck & Co. and Endo International PLC, according to recent company filings with the U.S. Securities and Exchange Commission. (Loftus, 5/10)

Generic drug investors can breathe a sigh of relief. Despite worries, not every company flunked its first-quarter earnings checkup. Generic pharmaceutical stocks sold off last week after Endo International shares plunged on lowered 2016 guidance. The reasons cited for the worsening outlook, including “greater than expected pricing erosion across the generics sector,” rattled investors in a number of stocks. This came after Perrigo cited similar reasons to cut guidance last month. And generic drug distributors had warned of lower prices back in January. But other first-quarter results this week suggest industry-wide fears might be overdone. Teva Pharmaceutical Industriesid Monday “nothing” about the pricing environment had changed since last fall. (Grant, 5/10)

A group of major U.S. investors, spooked by the recent slump in biotech shares amid political bashing of drug prices, met with a lobbying group and executives last month to urge them to do a better job in defending their industry and take control of the conversation before lawmakers try to regulate prices. Representatives from Fidelity Investments, T. Rowe Price Group Inc. and Wellington Management Co. -- which all invest about a fifth or more of their U.S. stock holdings in health care -- were among those at the meeting, held at a Boston hotel, according to people familiar with the matter who asked not to be identified because the meeting wasn’t public. (Chen, 5/9)

Prior to purchasing a pair of important heart drugs used by hospitals, Valeant Pharmaceuticals closely studied the possibilities for large price hikes and the ability of the marketplace to sustain them, according to more than 800 pages of documents released during the weekend by a Senate committee. And to further justify its decision to jack up the prices after acquiring these medicines, Valeant relied on market research data showing most large hospital systems did not seem to react to large price hikes taken by the company that previously owned the medicines. (Silverman, 5/9)

If your pill had a passport, it might get more stamps than your own. To make the drugs you rely on, the ingredients may have been manufactured in China and India, then combined together in Germany, and pass through a half-dozen other countries before arriving at your local pharmacy. It’s really difficult to trace the path of any particular pill—even regulators struggle with this—but nearly all drugs are made in enormous batches, then divvied up and shipped around the world. (Ossola, 5/7)

Supporters of a prescription-drug price ballot issue are nudging state lawmakers to see if they intend to act on the proposal. Columbus attorney Donald McTigue sent a letter Monday to legislative leaders on behalf of the AIDS Healthcare Foundation, the California group backing the drug issue. "The General Assembly has taken no action on the proposed law in the more than three months since it was received," McTigue said in a letter to Ohio House Speaker Cliff Rosenberger, R-Clarksville, and Ohio Senate President Keith Faber, R-Celina. (Johnson, 5/9)

Figuring out how rebates and discounts impact total drug spending is one of the biggest challenges to understanding prescription drug price trends. These deals between insurers and drugmakers often are private. Officials from both industry sectors think it should stay that way. (Owens, 5/5)