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Jul 20, 2015
 |  BioCentury  |  Strategy

Paying in heart failure

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 AG had 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.

"Novartis has to encourage plans by giving them some incentive, by trying to remove the argument simply over price, because you're never going to win against a generic, and focus it on the total cost of healthcare," said Roger Longman, CEO of reimbursement consultancy Real Endpoints LLC.

Harvard Pilgrim...

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