Heart Failure | Access and Reimbursement | US | 2016

One of the most intriguing but administratively difficult trends in U.S. health insurers’ attempts to control the rising costs of prescription drugs is the use of outcomes-based contracting, which holds pharmaceutical companies accountable for the ability of their expensive new therapies to work as promised in the real-world patient setting. One of the most well-known testers of the strategy to date is Novartis, which has entered OBCs with managed care organizations around the country to demonstrate the ability of Entresto, an expensive new branded drug in a field of generics, to reduce the incidents of deaths and hospitalizations due to chronic heart failure. Decision Resources Group’s timely survey of MCOs and cardiologists shed light on the future of such novel contracting strategies for CHF and in general, and on the impact on therapies subjected to this new level of scrutiny.

Questions Answered in This Report:

· Outcomes-based contracts are agreements between insurers and pharmaceutical companies to measure a therapy’s impact on agreed-upon clinical and/or economic outcomes on a portion of the insurer’s membership to determine how the drugs will be reimbursed. How many surveyed MCOs have OBCs currently and how many expect to have them in the future? What types of metrics are measured or will be measured in OBCs that evaluate therapies for chronic heart failure? How do MCOs expect to reward manufacturers when the expected results of contracts are achieved and what might happen when a drug doesn’t pass the test?

· Physicians remain largely unaware of outcomes-based contracts but appear to be willing to learn about them and participate in them. What kind of patient share do the two newest branded drugs in CHF, Entresto and Corlanor, generate among surveyed cardiologists currently? How might the positive results of Entresto’s OBC affect cardiologist prescribing? What is the role of physicians who are involved in OBCs currently and what kind of contract-related activities are they willing to participate in?

· Another tool payers are increasingly examining to control the costs of therapies is indication-specific pricing or indication-based formularies, which reimburse drugs differently by indication depending on the drug’s effectiveness for that given indication. How might the strategy play out in CHF when and if Entresto and Xarelto, a blood thinner used to treat atrial fibrillation, are approved to treat preserved and reduced ejection fraction by 2020? Do MCOs foresee using indication-specific pricing or tiering for stem cell and gene therapies in late stage development for CHF?

Scope:

· Markets covered: United States.

· Primary research: Surveys of 100 cardiologists and 41 managed care company officials, including 19 pharmacy directors and 22 medical directors in September 2016.

· Indication coverage: Chronic heart failure

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