Drugmakers generally expect to make most of their money on new drugs in the U.S., the world’s largest market with the most liberal payment system. And so it was with the new heart drugs from Novartis and its heart failure drug Entresto. But while payer pushback on Entresto and some other new generation heart drugs are dulling sales in the U.S., Novartis ($NVS) is seeing much faster uptake of Entresto in Europe.
Novartis reported $17 million in sales for Entresto in Q1, much less than analysts were looking for, as sales in the U.S. came slowly. The company didn’t break out sales by market, but in its earnings release, Novartis said that “Early experience in Europe has also been encouraging, with better early access and a more rapid uptake.”
There was a forewarning of this trend earlier this year, when Novartis' head of pharma David Epstein said that in Germany, in the first week alone, doctors had put 1,000 patients on Entresto, Bloomberg reports. In the U.S., it took 6 months to get 11,000 patients on the heart failure drug. In Switzerland, Novartis' home country, uptake was 5 times that of the U.S., Epstein said at the time.
Novartis CEO Joe Jimenez postulated that the difference is that in Europe, the government generally is the main payer for both pharmaceuticals and hospital treatment and Novartis is selling the drug by pointing out that it can reduce hospitalizations among heart failure patients by 20%.
“The savings that Entresto could provide across the system is being recognized,” Jimenez said on a call with journalists Thursday, Bloomberg reports.
The Swiss payment system is “straightforward,” Epstein has explained. “Once the price is negotiated, the market opens.”
That stands in contrast to what drugmakers are facing in the U.S. right now. A national debate over drug prices has changed the landscape in a market that has traditionally been willing to pay for new and promising drugs like Entresto. But Novartis' drug, as well as new PCSK9 cholesterol drugs from Amgen ($AMGN) and from Sanofi ($SNY) and partner Regeneron ($REGN), are seeing slower uptake than initially expected, Reuters reports.
The U.S. price for Entresto is about $4,500 a year before discounts, while the PCSK9 drugs cost about $14,000, much higher than existing generic meds commonly prescribed for treating heart disease. And Richard Chazal, president of the American College of Cardiology (ACC), explained to Reuters that "cost is a problem."
"There is concern on the part of many clinicians that if patients are reasonably stable and one starts a new medicine then they may become discouraged by the cost and actually stop taking medication," Chazal said (as quoted by Reuters).
On top of that, some of the sources that doctors turn to for guidance on when to prescribe the meds, like the ACC and the American Heart Association, have yet to put out guidelines.
"We're extraordinarily fortunate to have these wonderful new tools that science shows us can potentially improve outcomes," Chazal told the news service. "How to use them is something we are still working through but I think we will see increased uptake in the next 12 months."
In the face of this uncertainty, expectations for Entresto are changing. Novartis said it expects 2016 sales of $200 million, half of what analysts had forecast for a drug that Novartis has projected should reach peak sales of $5 billion. To improve sales, Novartis has said it will expand its U.S. sales force for Entresto and is starting a direct-to-consumer advertising campaign to get the word out about its benefits.
To help bring payers around, Novartis also is offering a pay-for-performance model, linking rebates to Entresto's results. It has struck deals with Cigna ($CI) and Aetna ($AET) to test the "value-based" pricing arrangements.
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