For two large insurance companies payment for the new heart failure drug Entresto will be linked to its health benefits. Both Cigna and Aetna have confirmed that they have reached a pay-for-performance deal with the drug’s manufacturer, Novartis.
According to a press release issued by Cigna, “the pay-for-performance agreement ties the financial terms to how well the drug improves the relative health of Cigna’s customers. The primary metric is reduction in the proportion of customers with heart failure hospitalizations.”
Cigna said that Entresto prescriptions will still require prior authorization. Aetna told Reuters that it had “signed a value-based agreement with Novartis that is based on the drug replicating results that it achieved during clinical trials.”
Entresto was approved last summer for the treatment of heart failure with reduced ejection fraction. It’s list price is $12.50 a day, which works out to $4,560 per year, though insurance companies nearly always negotiate significant discounts. The Institute for Clinical and Economic Review (ICER) performed a cost-effectiveness study and concluded that the newly-approved heart failure drug was 17% overpriced but still fell within cost-effectiveness thresholds.
Initial sales of Entresto have been slow, though analysts anticipate a significant ramp up in sales later this year.
There has been considerable discussion in recent years about performance-based pricing for prescription drugs. The details of most programs have not been fully disclosed and it is unclear how these plans will work out in the real world.
Last November the CEO of Novartis expressed frustration over the difficulty of implementing outcome-based pricing. “The basic infrastructure of electronic medical records, let’s call it ‘real-world data’, is going to have to increase so that we can easily track and monitor outcomes,” the Novartis CEO Joe Jimenez told Reuters. “If you move to that kind of pricing system over a period of years, you will be able to take out a lot of waste.” With Entresto, “Jimenez figured he had the perfect drug to get insurers to warm to a new ‘risk-sharing’ approach. Entresto would come at a discount, he proposed, with insurers paying Novartis more if it cut the need for further costly hospital visits, compared with cheaper, older medicines.”