Novartis sets heart-drug price with two insurers based on health outcome

NEW YORK (Reuters) - U.S.-based health insurers Cigna Corp and Aetna Inc have struck deals with Novartis AG for a performance-based price for the Swiss drugmaker’s new heart drug, Entresto, the companies said on Monday.

A Novartis logo is pictured on its headquarters building in Mumbai February 6, 2014. REUTERS/Danish Siddiqui

The agreements are among the few performance-based deals that have been made public by drugmakers and U.S. managed-care companies, which say they have been having more discussions about linking price to health outcomes in order to cut unneeded drug spending.

Drug prices jumped about 13 percent in the United States last year, spurring a public outcry and moving the issue onto the campaign platform of Hillary Clinton and other U.S. presidential candidates for the November 2016 election.

Under the agreement, Cigna said its payments to Novartis will be linked to how well the drug improves the relative health of Cigna customers.

Entresto is approved for the treatment of chronic heart failure.

Specifically, Cigna said payments will be based on a reduction in the proportion of customers who are admitted to hospital for heart failure.

The agreement applies to Cigna’s commercial business and does not apply to its Medicaid or Medicare plans.

Entresto, which costs about $12.50 a day, or $4,560 per year, was approved by the U.S. Food and Drug Administration in July. It is cheaper than some other new drugs, but costs more than analysts expected.

The Boston-based Institute for Clinical and Economic Review, an independent group that analyzes drug prices, has said the price should be 9 percent lower.

Aetna, in an emailed statement, said it signed a value-based agreement with Novartis that is based on the drug replicating results that it achieved during clinical trials. In trials, Entresto cut hospitalizations and the rate of cardiovascular death related to heart failure.

Aetna did not provide further information about the terms of the agreement.

Novartis Chief Executive Joe Jimenez has publicly discussed signing more outcome-based pricing deals.

A Novartis spokesman on Monday confirmed that the company’s head of pharmaceuticals, David Epstein, was referring to Cigna and Aetna when he said during an investor conference call late last month that Novartis had signed deals with two health insurers.

Epstein, on the Jan. 27 call, said that under the deals, Novartis had agreed to a base price and a modest rebate, which would fluctuate based on hospitalizations and savings to the plan.

(Corrects discount Institute for Clinical and Economic Review recommended to 9 percent from 17 percent in paragraph 9)

Reporting by Caroline Humer; Additional reporting by John Miller in Zurich; Editing by Bernadette Baum and Leslie Adler