Novartis sees different drug pricing models: CEO in NZZ am Sonntag

[December 21, 2015]  ZURICH (Reuters) - Drug companies have taken too great a share of the benefits of new drug treatments but are moving to different models involving sharing more with health systems and insurers, the head of Swiss-based Novartis was quoted saying on Sunday.

"We need to transition into a system in which pharmaceutical manufacturers share the benefits of new drugs with the healthcare system," CEO Joe Jimenez told the NZZ am Sonntag. "At the moment, we still keep too much of that benefit for ourselves."

The industry was moving toward a success-driven pricing model that the Basel-based drugmaker will be testing with its new heart failure drug Entresto, Jimenez said.

"Initially, we're setting the price for Entresto based on the assumption that the number of hospital admissions due to heart failure, and therefore the treatment costs, will fall a certain percent," Jimenez said. "These benefits will then be shared between the insurer, the hospital and Novartis."

Should hospital admissions exceed expectations, Novartis will have to raise its discounts, he added.

Jimenez said it was such initiatives, rather than actions by politicians, which would have greatest effect on drug pricing.

"I'm not saying pricing in the United States is not an issue ... Something will change. But I don't think the government will bring that change, I think it will come from the private sector," he was quoted saying.

(Reporting by Brenna Hughes Neghaiwi; Editing by David Holmes)

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