NEW YORK, July 13, 2007: Drug companies like to say that their most expensive products are worth their breathtaking prices. Now, one company is putting its money where its mouth is by offering a money-back guarantee.

The company, Johnson & Johnson, has proposed that Britain's national health care system reimburse use of the cancer drug Velcade, but only for people who benefit from the medicine. The company would refund any money spent on patients whose tumors don't shrink sufficiently after a trial treatment, which can cost $48,000 per patient.

The ground-breaking proposal, along with less radical pricing experiments in the United States and around the world, may signal a willingness in the pharmaceutical industry to edge toward a new pay-for-performance paradigm in which the price of a drug would be based on how well it works, and might be adjusted up or down as new evidence is released.

"I think payers will say, 'If the product works and it creates value, we will reward you for it,' " said Anthony Farino, a pharmaceutical industry consultant at PricewaterhouseCoopers. "If not, we won't reward you."

It is too soon to tell whether such a pricing paradigm could actually work, in particular because in many cases it can be difficult to measure how well a drug is working. And the approach would probably be most feasible in countries, like Britain, where the government is the primary payer.

But even in the United States, private insurers and Medicare, the national health insurance program for people 65 or older and for the disabled, are already experimenting with new ways to create cost-justified payment systems for medical treatments.

The potential benefits might go beyond simply saving money. Pay-for-performance pricing could make it easier for patients and their doctors to try expensive treatments without busting the bank or forcing insurers to make all-or-nothing decisions about reimbursement.

That was the rationale behind another experiment that is already under way in Britain. Four makers of multiple sclerosis drugs have agreed to eventually lower the prices of their drugs - which currently cost almost $20,000 per year - if the medicines do not fully meet expectations.

Separately, GlaxoSmithKline says it has made similar agreements with two European governments, although it declined to identify either of the countries or the drugs involved.

Such "risk sharing" deals, as they are being called, would be harder to arrange in the United States. "There's no way we could ask for it and have any leverage," said Lee Newcomer, senior vice president for oncology at the UnitedHealthcare, a large U.S. insurance company. Newcomer said that state regulations and marketplace pressures make it virtually impossible for an insurer to refuse to pay for a drug that has been approved by the United States Food and Drug Administration, regardless of its price.

And yet, UnitedHealthcare is trying a risk-sharing experiment with Genomic Health, a company that sells a $3,460 genetic test meant to help determine whether a woman with early-stage breast cancer would benefit from chemotherapy.

The insurer has agreed to pay for the test for 18 months while it and Genomic Health monitor the results. If too many women are still receiving chemotherapy even if the test suggests they do not need it, Newcomer said, UnitedHealthcare will seek to negotiate a lower price on the grounds that the test does not have the intended impact on actual medical practice.

"The point is to try to make the manufacturer responsible for how their product is used in the medical marketplace," Newcomer said.

Genomic Health said it could not comment on individual contracts but acknowledged that it was working with various payers on performance-based contracts.

The pharmacy benefit management arm of Cigna, another big U.S. insurer, has a more audacious idea. It is trying to persuade the makers of cholesterol-lowering pills to agree to pay the medical expenses of patients who suffer heart attacks even though they have been steadfastly taking their medicine.

"It's their opportunity to show they stand behind their medication and are confident of the results," said Thom Stambaugh, the chief clinical officer for Cigna Pharmacy Management. He said that the drug companies seemed interested in at least considering the proposition.

Some companies that sell expensive drugs said that they already make drugs available to patients who cannot afford them. Genentech also said it was working on tests to better determine which patients should get a drug to begin with.

But drug companies might need to be more flexible in countries like Britain, where drugs are paid for only if they are deemed cost effective - as measured by how much the health system must pay to achieve certain gains in the length and quality of patients' lives.

"If we didn't enter into the risk-sharing scheme, we wouldn't really have a market here in the U.K," said Pete Smith, a manager for Biogen Idec. The company makes Avonex, a multiple sclerosis drug that costs the equivalent of about $18,000 a year in Britain and is covered under the risk-sharing arrangement.

Under the plan, about 5,000 multiple sclerosis patients are being followed for 10 years to see how well the drugs slow the progression of the disease. The prices of the drugs will be adjusted along the way.

But measuring improvements in the quality of life is an imprecise science at best. The scale used to measure the severity of a disease, for example, focuses too much on a patient's mobility and not enough on other problems associated with multiple sclerosis, like fatigue and mental decline, said Nicola Russell, director of services for the MS Trust, a philanthropy that administers the multiple sclerosis program. "We're stuck with it because nobody's come up with anything better," she said.

Johnson & Johnson's money-back proposal on Velcade was also made under some duress. An advisory organization to the British government had initially ruled that the drug, which is used to treat multiple myeloma, a cancer of the bone marrow, was not cost effective and that the National Health Service would thus not pay for it. After cancer patients protested and the company won an appeal forcing the agency to reconsider, Johnson & Johnson made its money-back offer as a way to get the drug designated as cost-effective.

"At the end of the day all pharmaceutical companies want to ensure that all patients have access to their therapies," said Kate Purcell, a spokeswoman for Johnson & Johnson.

Under the proposal, which both the company and the government hope to complete in the next few weeks, all patients would be eligible for four cycles of treatment, which costs about $24,000.

If the tumors appear to have shrunk by that point, as determined by a blood test, treatment would continue, usually for another four cycles, and the health service would pay. If tumors have not shrunk, treatment would stop and the company would pay back the money spent on the drug up to that point.

But Johnson & Johnson and the government advisory committee disagree on how much the tumors must shrink in order for treatment to continue. The government is proposing at least a 50 percent reduction, known as a partial response, in a telltale protein produced by the tumors. The company is arguing that a 25 percent reduction, known as a minimal or minor response, should be sufficient. The company and some other experts argue that some patients who have only a minimal response after four cycles of treatment later go on to have remissions.