July 20, 2015
BioCentury
By Jennifer Rhodes
Why Novartis likes outcomes-based payment for Entresto in heart failure ?
Because Entresto sacubitril/valsartan is entering a market in which cheap generics are the standard of care, Novartis AGhad to get creative. That’s why the pharma is discussing a performance-based pricing model with a few payers that would begin with discounts for its new heart failure drug, and then would give the pharma a piece of downstream healthcare savings.
The scheme is novel in that Novartis would accept a greater share of the upfront risk compared with outcomes-based contracts that start with a higher upfront price and provide payers with rebates if outcomes are not as good as expected.
FDA approved Entresto on July 7 to reduce the risk of cardiovascular death and hospitalization for heart failure in chronic heart failure patients with reduced ejection fraction. In the Phase III PARADIGM-HF trial, Entresto reduced the risk of death from CV causes by 20% and reduced hospitalizations due to heart failure by 21% compared with enalapril.
About 85-90% of the heart failure market is served by generic angiotensin-converting enzyme (ACE) inhibitors. Enalapril has a wholesale acquisition cost (WAC) of $0.74-$1.83 a day depending on the dose.
Entresto’s WAC is $12.50 a day.
