Pharmacy benefits manager Express Scripts is making good on its promise to rein in cancer-care costs by developing a new system that will tie what it will pay for a drug based on how well the oncology therapy performs in a patient with a certain type of cancer.

The new system was first reported by The Wall Street Journal. Express Scripts discussed the new system with clients at its annual conference on May 13.

Express Scripts spokesperson Brian Henry told MM&M the strategy would mean that payments for cancer medications approved to treat different cancers would vary based on the condition for which they were prescribed. This concept of value is in line with the outcomes-based mind-set that guides treatment decisions at accountable care organizations.

Henry described the current system as one in which a drug’s price is the same regardless of the condition it is being used to treat, with prices always at the highest rate. He said making pricing specific to each cancer would make the drug more affordable, reward drugmakers for innovation and keep costs down.

An impact-pricing system would mean the drug would have a lower price when used to treat patients who may not benefit as much from the drug as compared to other patients.

The new payment system could be applied to other diseases and conditions, Henry said. Rare diseases are one such category—these drugs are intended for small populations but often end up being applicable to bigger populations, such as the experimental class of cholesterol-lowering PCSK9 inhibitors. The initial audience for these medications will likely be small—patients with hypercholesterolemia or those who cannot tolerate statins. However, PCSK9 inhibitors may be useful for patients beyond this group, and some companies estimate the broader patient population could increase an anticipated $16-billion market by an additional $50 billion to $100 billion.

This past year has shown that Express Scripts is not afraid to pick a fight. The PBM cut a deal with AbbVie to give its Viekira Pak hepatitis-C cocktail preferred formulary status after criticizing the pricing for Gilead Sciences’ hepatitis-C treatments, Sovaldi and Harvoni.

While Sovaldi’s $1,000-per-pill price angered lawmakers and payers, oncology drug prices have been consistently rising. Cancer treatments have become more effective, but researchers at both MIT and the National Cancer Institute have found that the price increases outpace patient gains.

Cancer medications led Express Scripts’ list of the most costly per-member-per-year specialty drugs of 2014, with oncology therapies—Celgene’s Revlimid, Novartis’s Gleevec and Johnson & Johnson’s Zytiga—taking up three of the top 10 slots, wedged between Sovaldi and Johnson & Johnson’s hepatitis-C drug Olysio. Express Scripts reported at the time that use of cancer medications has also grown and treatments often allow a patient to live longer, which means cancers “now often can be treated like chronic illnesses that require ongoing therapy.”

Cancer drugs also account for a chunk of what the US spends on drugs. The IMS Institute for Healthcare Informatics recently said that 11.3% of the money spent on drugs in the US are for cancer and the monthly cost of treatment—which often includes more than a single medication— jumped 39% over the past decade.

IMS anticipated the situation Express Scripts is seeking to address—which is that multi-indicated cancer drugs do not perform equally across conditions, making it difficult to assess their value. IMS said that combination therapies are also poised to be more integral in the next wave of cancer care, which can also make evaluating the value of cancer drugs difficult.

Henry said putting a value on combination drugs will come at some point but that the PBM is going to start by looking at indications and the outcomes for each drug in each indication. He said that clinical trial data and input from experts like Dr. Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, will shape Express Scripts’ further strategy.

Bach published an article in Journal of the American Medical Association last year arguing for indication-based pricing for cancer drugs.

The results of the new system will show up in the PBM’s 2016 formulary, which will be released later this year.