The Big Pharma Playbook it is called. It’s time may be passing. Novartis new drug for heart failure, ENTRESTO, may be introducing a radical approach that fits the new health reform imperatives and challenging the decades-old economic, profit model.
Since the advent of DTC advertising in the late 1990’s, it is has become apocryphal that if you spend enough on TV and print, you will drive droves of patients into doctors offices to ask for your medication; or at the very least, patients will ask if they suffer from the condition and with high awareness, have the doctor prescribe the advertised drug. Driving demand side-stepped the insurance company pricing barriers.Then, the Brand has 7+ years to squeeze as much profit from the drug until it loses it’s patent. Pretty straight forward.
But market and legislative forces are rendering that model a marketing relic. Think about it; over 70% of all drugs are generics, so when a new higher priced drug comes to market, the Brand is fighting with pharmacies, insurance companies and others to negotiate a price that both can afford. More influential to pricing strategy is the Affordable Care Act presses hospitals and others to focus on “outcomes” — the patient-by-patient aggregated data that shows how well a drug has performed over a period of time. More and more, the consolidation of insurance companies, the power of pharmacies, and cost control are taking away Big Pharma negotiation leverage.
Why is this hot? Because Novartis is launching ENTRESTO with clinical data that shows it is 20% more effective than the nearest treatment for heart failure, a condition that impacts 2 million lives a year in the U.S. But Novartis is embracing the present and future and looking at risk-sharing and using Big Data to measure drug effectiveness to prove that the market should pay more than a generic.
As the Novartis press release states: “…propose discounts…followed by bonuses or price raises over the long-term if the medicine reduces hospitalizations for patients.” Novartis will help payers with the initial incremental cost and its impact on their budgets, and allow payers to earn savings and share that risk with the drug developer.
Beyond discounts and risk-sharing, Novartis has created a suite of patient support services that go beyond traditional models…from Apps, to tele-health, to online video chat, to 24/7 nurse support…Novartis is creating a value-based model where the Pill + Partner is the formula for launch, not the DTC drive volume and maximize profit. Will this prove itself the new model? Wait-and-see. More important perhaps, is that Novartis has offered a new incredibly effective drug that is affordable (around $4,500 a year versus, let’s say, $150,000 a year for an oncology drug) that will save lives. This alone may touch any of us.