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PAPER OF THE WEEK: Benefit-Based Co-pay and the Origins of Value-Based Insurance Design

Mary Caffrey
This week's paper from our editors-in-chief presented the idea of tying a prescription drug's cost-sharing to its clinical value to the patient.
Welcome to Paper of the Week, which looks back at research and commentary from the past 25 years in The American Journal of Managed Care®, and why they matter today. This week, we revisit one of the most important papers to appear in the journal—from our own editors in chief—A. Mark Fendrick, MD, and Michael Chernew, PhD, who in 2001 presented the idea of tying a prescription drug’s cost-sharing to its clinical value to the patient.

This concept, presented in the paper, “A Benefit-Based Copay for Prescription Drugs: Patient Contribution Based on Total Benefits, Not Drug Acquisition Cost,” is a foundation of value-based insurance design (V-BID), which both Fendrick and Chernew have examined for the past 20 years. Fendrick serves as director of The University of Michigan’s V-BID Center, while Chernew is director of Harvard’s Healthcare Markets and Regulation Lab.

For the 2001 paper, visit

This week, Fendrick made a presentation to members of the Northeast Business Group on Health on V-BID’s potential for employers. He was joined by Suzanne Delbanco of Catalyst for Payment Reform. For coverage of the session, visit

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