Ways to win health insurers are sought after by Novartis

BASEL, Switzerland- Novartis AG might offer a bundle of health-care services alongside its promising new heart-failure drug to win over increasingly cost-conscious insurers, its chief executive said.

The drug, called Entresto, has been shown to reduce the rate of hospitalization and cardiovascular death in heart failure compared with the current standard treatment. The U.S. Food and Drug Administration approved it earlier this week, and cardiologists have cheered the drug as a significant improvement over the status quo. But at $12.50 per patient a day, it also carries a substantially higher price tag than the older drugs, which cost less than a dollar a dose. This could prove a barrier to fast adoption, even though Entresto could save payers thousands of dollars on hospital admissions.

Chief Executive Joe Jimenez said Thursday Novartis was “looking hard” at going to insurers with add-on services intended to further improve outcomes for patients on Entresto. He said this could involve providing a device that allowed doctors to monitor patients remotely so they could pick up on early signs of deterioration. “If you had a remote patient-monitoring device that the patient could use in their home together with Entresto, we could make an even more serious dent in hospitalization,” he said in an interview with The Wall Street Journal.
Remote monitoring is still in its infancy as a technology, but recent pilot programs by health systems have involved patients using basic instruments such as scales, blood-pressure cuffs or fingertip blood-oxygen meters to measure themselves at home. An Internet-connected device in the home collects the information and sends it to the patient’s doctor, who can make clinical decisions such as dose adjustments or scheduling a checkup if there are signs that a condition is worsening.

Novartis already offers extra services with a number of its drugs, such as access to trained nurses by phone for advice on insurance and treatment processes. Remote patient monitoring with Entresto would be its first venture into offering such digital health-care products alongside its drugs, however.

The Novartis boss didn’t elaborate on his plans for Entresto but said offering additional services on top of drugs would become more commonplace.

“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, ” Mr. Jimenez said. “You’re going to see Novartis go to payers with multiple services.”

He said Novartis wouldn’t necessarily acquire those services but instead would partner with companies that provide them. “Together we can go [to insurers] as a bundle to say: ‘Here’s what we’re going to offer you, and here’s what we can do to reduce your total cost through the system,’ ” he said.

Novartis is already discussing flexible pricing models for Entresto with insurers. These would involve the insurer getting a partial refund if the drug didn’t produce the promised outcomes and the company getting a bonus payment for exceeding expectations. Mr. Jimenez said some insurers, which he declined to name, were interested in this “pay-for-performance” model over paying a fixed per-pill cost.

This type of deal is are becoming increasingly common in the U.S., where insurers have balked at the high price tags for new drugs that treat cancer and hepatitis C. Novartis itself has already agreed to an outcomes-based payment model for its multiple-sclerosis drug Gilenya with U.S. insurer Humana Inc.

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