Cigna makes performance-based drug pricing deal with Novartis

Health insurer Cigna has teamed up with Swiss drugmaker Novartis AG to set the price for a new heart medication based on performance, Reuters reports.

The pharmaceutical industry is currently stuck in an old construct that focuses on price, regardless of the health outcomes of patients, and this move by Cigna and Novartis is one of the few performance-based deals that have been made public, Reuters notes. In an effort to curtail drug spending, insurers have been pushing manufacturers toward value-based deals. And drug companies increasingly appear willing to work with them.

Under their agreement, Cigna will pay Novartis based on how well the drug--called Entresto--improves the relative health of Cigna's customers. The medication will be priced based on how well it reduces the proportion of customers who are admitted to hospital for heart failures, according to Reuters. Currently, Entresto costs about $12.50 a day or $4,560 per year.

Novartis CEO Joe Jimenez has previously said that there are some major barriers preventing outcome-based pricing from going mainstream. As FierceHealthPayer previously reported, Jimenez ran into roadblocks when he tried to pursue a risk-sharing arrangement for Entresto, as insurers said his plan was too complicated.

Last year, Humana made value-based arrangements with 13 companies that cover treatments for a range of diseases. In the public sector, meanwhile, experts have said that the federal government could save anywhere between $15.2 billion and $16 billion annually if it negotiated Medicare Part D prescription prices with drugmakers.

To learn more:
- here is the Reuters article