Perverse Incentives: Pfizer is having a good year thanks to cholesterol lowering drugs. At the same time, insurance companies are experimenting with the "pay for performance" model. One of those experiments involves rewarding doctors for keeping their patients' cholesterol levels below defined guidelines. Cholesterol is an easy benchmark to measure and to collect, but the guidelines themselves are not without controversy. Rumor has it that some doctors with a large populations of cholesterol-targeted patients, such as cardiologists, are receiving bonuses in the 5-figure range. At least one news account appears to confirm this.

That's a hefty incentive to get those cholesterol numbers down as low as possible. How do you suppose they achieve the goals? By educating and encouraging lifestyle modification - i.e. diet and exercise? Not likely. That's too time consuming and patient-dependent. A drug, or two, or three will reward the doctor with stellar lab results, though it might penalize the patient in drug costs and side effects. And what if the patient complains that their muscles ache every since they've been taking those three cholesterol medications? He'll get a pat on the back and an admonition to bear with it. "Which would you rather have, a heart attack or achey muscles?"

Pay-for-performance - a boondoggle for physicians and the pharmaceutical industry, but little benefit to the patient or the insurance industry. How long will it take before insurance companies figure out it's costing them more than it's saving them?