- Harvard Pilgrim Health Care, a large health insurer in New England, has negotiated two separate pay-for-performance deals with Novartis and Eli Lilly which will tie the cost of each drug to patient outcomes, the company said Monday.
- In the deal with Novartis, Harvard Pilgrim will receive a discount if the Swiss company's new heart med Entresto fails to reduce hospitalizations for heart failure by an undisclosed amount.
- Separately, the net cost Harvard Pilgrim pays for Eli Lilly's type 2 diabetes drug Trulicity will be linked to the number of patients who hit an agreed-upon endpoint, compared to similar drugs in the class.
Pay-for-performance deals have become more common as insurers and benefit managers look to limit the effects of rising prescription drug costs. For pharmaceutical companies looking to capture market share, outcomes-based pricing can help circumvent payer reticence to widely cover newly-approved drugs.
Novartis struck similar deals earlier this year with both Aetna and Cigna, two of the largest insurers in the country, linking Entresto's cost to patient outcomes in both.
Despite strong clinical data and a key recommendation from leading cardiology groups, Entresto has struggled since its launch last year. Sales have been anemic, with only $5 million in the fourth quarter and $17 million in the first three months of 2016. But Novartis continues to stand by its forecast of $200 million for the year and is aggressively expanding clinical testing.
Securing another deal with a larger insurer should help Novartis further boost coverage for Entresto.
Harvard Pilgrim's deal with Eli Lilly is structured a little differently than the agreement with Novartis. The insurer will pay a higher net cost for Trulicity if the drug lowers hemoglobin A1c levels below 8% for more patients than other rival GLP-1 drugs. Conversely, Harvard Pilgrim will pay a lower net cost if the drug fails to work as well.
In addition, Trulicity will be given preferred access on Harvard Pilgrim's formulary.
"What is particularly attractive about this agreement is that the outcomes compare Lilly's drugs to competitior offerings versus arbitrary endpoints," said Michael Sherman, chief medical officer for Harvard Pilgrim.
A recent poll of payers by Avalere Health, a healthcare consulting firm, suggested interest in outcomes-based deals is widespread among payers. Among surveyed companies, over 60% of health plans had a high, or very high, level of interest in pay-for-performance deals for hep C or cancer drugs, perhaps reflective of the higher cost for these treatments.