Novartis CEO: Pharma needs to share both pain and gain with payers, providers
- Speaking with the Swiss publication NZZ am Sonntag, Novartis CEO Joe Jimenez said pharma companies need to share more of the benefits of drugs with the healthcare system. He also noted drug companies take too much of the net benefits associated with drug profits.
- Jimenez has proposed a "success-driven pricing model," in which the benefits will be shared among drug companies, insurers, and hospitals.
- Novartis plans to use this new pricing model with its recently approved heart-failure drug, Entresto.
Critics argue pharma companies enjoy the upside of successful drugs and the profits they generate, while off-loading the cost of failure onto payers and patients. Jimenez has proposed balancing that risk-sharing element with a benefit-sharing model.
Towards that end, Novartis will be piloting its success-driven pricing model with Entresto, used to treat severe heart failure. Pricing will be based on an assumption that the number of hospital admissions due to heart failure will fall a certain amount, resulting in lower treatment costs. If admissions don't fail, Novartis would raise its discounts for the drug.
Jimenez argued lower drug prices will come from private-industry solutions and efforts, rather than from new legislation.