Eli Lilly & Co. ($LLY) struck a groundbreaking pay-for-performance agreement with Harvard Pilgrim on the GLP-1 drug Trulicity, trading a formulary upgrade for rebates that depend on patients' blood sugar targets. The payer also became the latest to make an outcomes-based deal on Novartis' heart failure drug Entresto.
Trulicity, a relatively new entrant into the class dominated by Novo Nordisk's ($NVO) Victoza, gets a formulary upgrade with Harvard Pilgrim, in return for a money-back guarantee--and potential bonuses.
If fewer Trulicity patients reach their A1C target--less than 8%--compared with those using other GLP-1 drugs, Harvard Pilgrim will collect bigger rebates from the drugmaker. If more Trulicity patients hit their goals, then Lilly scores a higher net price for the med.
"Given the increasing burden of type 2 diabetes, this approach with Trulicity provides an innovative solution for people with diabetes, payers and Lilly," Tony Lawson, director of payer strategy for Lilly Diabetes, told FiercePharma. "We are working with a number of payers across the country to develop and execute" these types of contracts.
Harvard Pilgrim announced the Trulicity deal alongside a pay-for-performance arrangement on Novartis’ ($NVS) heart failure med Entresto. That arrangement stems from trial data showing that Entresto helped prevent the hospitalizations that can be common--and expensive--for heart failure patients.
The health plan will get a discount if Entresto does not reduce congestive heart failure hospitalizations by a set amount, Harvard Pilgrim said.
Novartis has already struck similar deals with two of the top insurers in the U.S., Cigna ($CI) and Aetna ($AET). The Swiss drugmaker’s CEO, Joe Jimenez, has been a vocal proponent of pay-for-performance, not only as a tool to help payers control overall healthcare costs but a way for pharma companies to reap more financial benefits from drugs that can deliver measurable benefits for patients.
“Executing these types of agreements can make it easier for payers to provide access to newer therapies since they tie payment for the drugs to meaningful endpoints,” Harvard Pilgrim CMO said of the Entresto deal. “We appreciate that Novartis was willing to come to the table and work with us on this agreement.”
Harvard Pilgrim’s Entresto deal is significant because it continues Novartis’ march toward pay-for-performance, and it shows that regional health plans--as well as national ones--see the value in striking deals based on Entresto’s real-world results.
But the Trulicity arrangement may be more important, given the ratcheted-up pricing pressure on diabetes drugmakers. Payers have targeted GLP-1 drugs and basal insulins, trading exclusive or preferred formulary status in return for discounts and rebates. With new drugs entering the market over recent months, and more in the near-term pipeline, the competition for coverage will only increase, and payer contracts based on A1C measures could be a way for diabetes specialists to put their money where their trial data is.
"These types of contracts give us a unique and innovative way to stand behind the benefits that we believe Trulicity can provide," Lawson said.
Sherman pointed to the fact that Lilly's deal doesn't depends on Trulicity's performance in a vacuum. “What is particularly attractive about this agreement is that the outcomes compare Lilly’s drug to competitor offerings versus arbitrary endpoints,” he said in a statement.
In addition to its pay-for-performance deal on Entresto, Cigna recently struck similar arrangements with Amgen ($AMGN) on its PCSK9 drug Repatha, and Sanofi ($SNY) and Regeneron ($REGN) on their rival med Praluent. Discounts depend on LDL reductions; if the meds deliver cuts in bad cholesterol as well as they did in clinical trials, a pre-negotiated discount applies. If the drugs don't hit those goals, the discounts increase.
Hepatitis C and oncology are two other fields where payers are eager to move to outcomes-based pricing, according to a report from Avalere earlier this month. Express Scripts ($ESRX), the pharmacy benefits manager, has said it’s working on a twist on that idea, testing indication-based pricing for cancer drugs, where prices vary according to a drug’s proven efficacy in various cancer types.
Multiple sclerosis and rheumatoid arthritis are two other areas payers would like to target.
Sherman says that Harvard Pilgrim, for one, will be among those payers looking out for more pay-for-performance agreements: “We believe that working with pharmaceutical companies that are willing to engage in these kinds of innovative, outcomes-based contracts will bring value to the members we serve.”
Most U.S. payers are eyeing outcomes-based drug pricing: Report
Cigna inks results-based deals on pricey Amgen, Sanofi PCSK9 meds
Novartis defies naysayers with newfangled pay-for-performance deals on Entresto
Surprise proposal: Medicare wants to jump on the value-based pricing bandwagon
It's not just payers waiting on PCSK9 outcomes data. Doctors are holding back, too
Novartis, Roche CEOs see performance-based future, but U.S. isn't ready yet
How to save 28,000 heart patients a year? Use Novartis' Entresto, JAMA says
Lilly fortifies its Trulicity case with new Lantus-beating combo data