Communicating Value

— Robert J. Easton, Co-Chairman, Bionest Partners

 

During the annual January gathering of the biopharma world in San Francisco this year, in-coming President Donald J. Trump put drug developers on notice and sent pharmaceutical and biotechnology stock prices plunging by accusing the industry of “getting away with murder” with respect to drug pricing.

 

Speaking just over a week later, at the annual World Economic Forum in Davos, Switzerland, Novartis CEO Joseph Jimenez spoke about the downward pressure on prices and how Novartis strongly believed that the industry needed to shift from “selling pills” to an outcomes-based approach where companies are paid based on the outcome those pills deliver.

 

And indeed, Novartis has already pursued this approach for its heart failure drug, Entresto®, which was shown to reduce the risk of death and hospitalization for those patients that take it.  The company is using heart failure hospitalization as an outcome measurement and has agreed to reduce the medication’s price to insurers if Entresto fails to keep patients out of the hospital.  Yet, while published independent research supports the potential of this drug to prevent as many as 28, 484 deaths each year, if used correctly, and to avert more than 200 hospitalizations for every 6,000 patients over the course of their lives, sales of the drug to date have been a disappointment.

 

Part of the challenge is collecting the data to measure value and whether the drugs are working for patients as claimed. We wrote about this — and how diagnostics firms are increasingly taking a leading role in providing such data about how well drugs work — in our article, “When Illumina Buys Roche.” We and others also believe that using data to support a value-based approach like this works better in an integrated healthcare system or perhaps for a self-insured employer.

 

But I also think Novartis may have missed a big opportunity in how they have advertised this potentially life-saving drug. While the company does a good job of educating patients about the risk of heart failure, there is nothing readily visible in their advertising or website about their price-based guarantee or potential price savings. There is no mention of cost. No mention of cost-savings. And no mention of their price reduction guarantee — in either the Patient or Healthcare Provider information on the Entresto website.

 

The data shows that Entresto can save lives, and for the insurer, it may save money as well. In these days where public opinion is loudly voiced against the pharmaceutical industry on issues of pricing, isn’t that a message that Novartis should be putting forth more clearly to payers, and physicians, and even patients?