Dive Brief:
- Joe Jimenez, CEO of Novartis, thinks drug pricing in the U.S. will only become more challenging for the industry next year regardless of who wins the presidential election, according to an interview given to the Financial Times.
- The debate around drug pricing has intensified over the past year as actions by companies like Turing Pharmaceutical and Valeant brought the issue further into the public and political eye.
- But in the interview, Jimenez suggested Novartis is planning for a more restrictive pricing enviornment. This has seemingly been borne out in the outcomes-based deals struck with major U.S. payers for its new heart-failure drug, Entresto.
Dive Insight:
Novartis has signed outcomes-based deals, also known as pay for performance, with Aetna, Cigna, Humana and Harvard Pilgrim, tying the cost of Entresto to its ability to reduce heart failure-related hospitalizations.
While the deals for Entresto are a good example of innovative pricing, the drug has failed to take off as expected. The drug notched just $21 million in revenues for all of 2015 and $59 million so far in 2016, despite strong clinical data and the backing of several cardiology groups.
Earlier this week, Novartis said it would ramp up investment in its US sales force and marketing to help boost uptake and maintains the drug can meet its annual target of $200 million in sales.
And Novartis' generics unit Sandoz has invested heavily in the development of biosimilars, or lower-cost versions of biologic drugs. Sandoz won the first U.S. approval of a biosimilar with Zarxio last year and recently secured the backing of a key FDA advisory panel for its copy of Amgen's Enbrel.
The FDA did, however, reject Sandoz's initial submission for a copy of Amgen's Neulasta, according to a disclosure in Novartis' quarterly report.
Still, Novartis appears to be positioning itself strongly for a more challenging pricing environment. Now it just needs deals like the ones it signed with Aetna and Cigna to lead to higher sales of Entresto.