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Novartis Tags Price Of Heart Drug To Patient Outcomes

Pharmaceuticals: Deal with two insurers is an early foray into performance-based pricing

by Rick Mullin
February 11, 2016 | A version of this story appeared in Volume 94, Issue 7

CORRECTION: This story was modified on Feb. 15, 2016 to reflect the Institute for Clinical & Economic Review’s final conclusion that the price of the Novartis drug Entresto should be 9% lower. The 17% figure originally cited in the article was the group’s preliminary finding.

Novartis has entered a performance-based pricing pact with U.S. health insurance majors Cigna and Aetna for Entresto, its new congestive heart failure drug. The novel deal is an early foray into crafting payment schemes based on patient outcomes and comes as drug companies are under pressure to lower prices.

Credit: Shutterstock
Novartis’s contract with Cigna and Aetna will tether the price they pay for Entresto to patient outcomes compared with clinical trial results.
A photo of a hospital patient with a monitor in the foreground.
Credit: Shutterstock
Novartis’s contract with Cigna and Aetna will tether the price they pay for Entresto to patient outcomes compared with clinical trial results.

Cigna says the deal ties the price of Entresto to how well it improves the health of patients relative to its performance in clinical trials. The primary metric will be the reduction in the proportion of customers hospitalized with heart failure across the insurers’ claims base, says Cigna spokeswoman Karen Eldred.

The agreement covers Cigna’s commercial business and not its Medicaid and Medicare programs.

Neither Cigna nor Aetna will detail the exact terms of payment. Novartis says it will reduce the price the insurers must pay if the rate of heart failure hospitalization of patients on Entresto exceeds a “prespecified threshold.”

The drug, approved by the Food & Drug Administration last July, combines valsartan, an angiotensin II receptor blocker, and sacubitril, which blocks an enzyme called neprilysin, in a single tablet. Together, according to Novartis, the molecules block a system that becomes overactive in heart failure.

When Entresto launched, Novartis set a price of $12.50 per day or $4,562.50 per year, a figure that garnered some criticism. The Institute for Clinical & Economic Review, a health care finance policy think tank, says the drug’s price tag should be 9% lower.

Novartis defends the price based on the common criteria of cost and benefit. “We believe that we’ve set a fair price for the product that is in line with the value Entresto delivers to patients and the overall health care system,” spokesman Michael Billings says.

Performance-based plans, however, may change pricing criteria in the future. Speaking to C&EN in 2014, Timothy Wright, who was then head of development at Novartis, said that pricing drugs according to patient outcomes creates “a bit of a scenario where pharmas become like insurance companies,” making risk-based determinations of outcome criteria and setting appropriate payments.



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