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Novartis heart drug may see novel pricing plan

Swiss firm looking to risk share with payers based on clinical outcomes

Novartis HQ 

The launch of Novartis' eagerly awaited new heart drug Entresto (sacubitril and valsartan) will likely come with a novel new pricing approach, according to the firm's head of pharmaceuticals.

David Epstein told CNBC that it was “beginning to share risk” when it came to pricing. The drug, which combines its now off patent blood pressure drug Diovan (valsartan) and a new antihypertensive drug sacubitril, is set for approval in August for patients with heart failure.

It is the first new drug of its kind in years but must compete with older, cheaper generic drugs for this licence, meaning Novartis must come up with a way of ensuring its drug can reach the expected blockbuster status - but not price itself out of the market.

Novartis already has a pricing system in place in the US using its multiple sclerosis drug Gilenya (fingolimod), where payment is structured out clinical outcomes, rather than a set per-pill price. This may be the way the world's biggest pharma firm decides to price Entresto.

Epstein said: “When you buy other goods that don't work you either take them back or get your money back. Our industry is a bit unique because historically if the drug doesn't work it still gets paid for. I think that model will have to shift.”

But Entresto could increase the short-term drug costs for a large number of patients, while having the potential to reduce their long-term medical bills.

The issue of drug pricing has come to a head recently, thanks to the launch of extremely expensive new medicines for cancer and hepatitis C, which are being priced at $80,000 to $150,000 per patient, per drug, and putting considerable strain on insurers and state-run health systems.

With Entresto on track for potential US approval in August, Epstein admitted that there would be some initial hurdles that would slow its uptake.

He declined to detail a likely cost per pill, but he said it would take into account “cost offsets”, such as fewer hospitalisations, as well as the value added from improving patients' lives.

“We going to try and be fair and reasonable,” he said.

This echoes the thoughts of Joe Jimenez, Novartis' CEO, who warned that companies could no longer expect to be rewarded for medicines that produce weak benefits or only incremental improvement over existing treatments in an era of rising pressure on health budgets.

“What's coming is not a pretty picture for anybody in the next 10 years and unless we . . . help reduce demand on the health system it is just going to mean more cost containment, more rationing of care and that's not good for the industry,” he told the Financial Times recently.

Jimenez said that in the future, the industry should be rewarded for positive patient outcomes and the value provided to societies.

“If medicines do not have an effect then those medicines deserve not to be reimbursed. That's going to happen with or without us so we'd rather be part of the solution.”

Article by
Ben Adams

1st July 2015

From: Sales



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