- Swiss drugmaker Novartis AG has agreed to performance-based pricing frameworks with two major U.S. insurers, Cigna and Aetna, for its heart disease med Entresto, according to Reuters.
- In Novartis' agreement with Cigna, the price of Entresto will be tied to the reduction in the proportion of Cigna customers with heart failure hospitalizations. This pricing scheme will only be in effect for Cigna's commercial business.
- Performance-based contracts are relatively rare, but have attracted interest as an alternate pricing model to help lower overall health costs and alleviate resistance to high drug prices.
Cost-sensitive insurers find performance-based pricing attractive as a way to manage costs, especially for new drugs where health outcomes have only been demonstrated in clinical settings.
"Outcomes-based contracts require that prescription medicines perform in the real world at least as well as they did during clinical trials and are a valuable tool for improving health and managing costs," said Christopher Bradbury, a senior vice president at Cigna.
Aetna did not specify the exact price mechanism in its deal but said it had entered into a value-based contract with Novartis. "The agreement will look to prove that similar patient outcomes can be achieved in a real world environment to those found when the drug was in clinical trials," the company said in an emailed statement.
Novartis CEO Joe Jimenez has previously spoken on sharing the benefits of drugs with the overall healthcare system. In December 2015, Jimenez indicated he supported "success-driven pricing models" and said Novartis would pilot this type of pricing with Entresto.
Entresto costs $12.50 a day, or roughly $4600 a year. However, the nonprofit healthcare research firm Institute for Clinical and Economic Review (ICER) recommended the drug be priced about 17% lower. Novartis' agreements with Cigna and Aetna could potentially bring Entresto within range of ICER's recommendation.
Approved by the FDA in July 2015, uptake for Entresto has lagged. The drug notched sales of only $21 million in 2015. Novartis recently blamed delays in U.S. insurers making Entresto available to insured patients for the slow sales.
This post has been updated to reflect an emailed statement from Aetna.