Novartis has signed deals with two major health plans, Cigna and Aetna, to reimburse for its new heart failure drug Entresto, Reuters reported. The deals are among the first publicly announced examples of outcomes-based drug pricing. While Novartis discussed using digital health devices as part of its planned Entresto rollout last year, reports about the new payer deals have not mentioned the prospect of including digital health tools in the mix.
Entresto has done better in clinical trials than the ACE inhibitors it would replace, but it’s more expensive at around $12.50 per day. This makes it an attractive test case for pay-for-performance drug pricing.
For now, those outcomes will be determined based on hospitalization and cost savings, Novartis Pharmaceuticals CEO David Epstein explained on Novartis’s Q4 earnings call, before the deals were fully public.
“The way that works is pretty straightforward,” Epstein said at the time. “We agreed to a base rebate for the product that’s actually fairly modest and then, depending upon whether or not we achieved specific goals around reduced hospitalization and savings to the plan, the rebate would either go up or go down. And we think that’s going to become something that becomes more and more popular in the US and around the world.”
Back in July, when news first broke that Novartis was looking to sell Entresto on an outcomes-based model, the company told the Wall Street Journal it was looking into remote monitoring and other digital health monitoring avenues to measure the drug’s performance, including possibly bundling devices with the drug.
“We’re going to have to get smarter about services around the pill … and move into some areas that are different from just discovery of the drug,” Novartis CEO Joe Jiminez told WSJ last summer. “You’re going to see Novartis go to payers with multiple services.”
Maybe Novartis has had a change of heart about the digital approach, maybe it needs to prove the concept of outcomes-based pricing before introducing another novel element, or maybe it just hasn't had enough time to figure out the best way to include digital health devices.