In June, Harvard Pilgrim Health Care announced that it had entered into a risk-sharing agreement with Novartis for sacubitril/valsartan (Entresto), a new heart failure treatment that received FDA approval in 2015. It was at least the third publicly acknowledged pay-for-performance deal for the drug this year. Why this drug, and why now?

A value proposition

U.S. commercial payers and pharmaceutical companies have rarely engaged in outcomes-based risk-sharing arrangements, at least until recently. Between January 1993 and December 2013, there were only 18 such deals in the United States, most of them involving Medicare (Am J Manag Care 2015;21[9]:632-40). Performance-based risk-sharing deals allow payers to hedge their bets with new drugs, according to Louis P. Garrison, Jr., PhD, an emeritus health economics professor at the University of Washington and lead author of the analysis. For pharma, they may provide access and compelling data to help grow market share.

“The core driver in risk-sharing agreements is some sort of question or uncertainty about the true clinical impact of the medicine in the real world,” Garrison says. “This uncertainty about the clinical impact leads to uncertainty about its cost-effectiveness and thus value.”

A drug may perform well in a randomized, controlled clinical trial, for instance, but those results may not translate into a nonacademic clinical setting and a broader patient population, observes Michael Sherman, MD, MBA, chief medical officer at Harvard Pilgrim, a not-for-profit health plan that serves 2.7 million customers in New England. “It is not surprising that people like myself say that is the best the data will ever be,” he says.

Performance-based risk-sharing deals between drug makers and payers tie price to outcomes, typically with the manufacturer agreeing to provide a rebate, refund or a price reduction if clinical outcomes in a defined time frame don’t make their targets. To work well, the deals require clearly defined, measurable and meaningful outcomes, infrastructure to collect the data, analytical resources and an adjudication process if results are questioned.

Cigna and Aetna entered risk-sharing deals with Novartis in early 2016, and Harvard Pilgrim announced its deal about five months later. First adopters like Cigna, Aetna and Harvard Pilgrim must weigh their implementation costs against potential benefits, according to Garrison. In addition, they must reconcile what he calls the “free-rider problem” of other payers or insurers reaping the benefits of insights gained without incurring the upfront costs.  

Industry, on the other hand, runs the risk of losing money if it misses targets, a risk made greater if outcomes are confounded by factors not related to the drug. But drug makers gain the real-world data to challenge skeptics, access to patients and an opportunity to partner with payers. “To the extent that a pharma company is actually willing to commit in a way that shows they believe in a drug, we as a payer may be more willing to improve the market access for that medication,” Sherman says.    

[[{"fid":"22781","view_mode":"media_original","type":"media","attributes":{"height":439,"width":577,"alt":" - sacubitril-valsartan","class":"media-element file-media-original"}}]]

Enter Entresto

The Novartis-sponsored pivotal PARADIGM-HF trial—short for Prospective Comparison of ARNI (angiotensin-receptor-neprilysin inhibitor) with ACEI (angiotensin-converting enzyme inhibitor) to Determine Impact on Global Mortality and Morbidity in Heart Failure—was terminated early after a median follow-up of 27 months because of the benefit found at its third interim analysis. The double-blind randomized study compared the neprilysin inhibitor sacubitril and the ARB valsartan with the ACE inhibitor enalapril in 8,442 patients with class II-IV heart failure and an ejection fraction of 40 percent or less. The results showed sacubitril/valsartan to be more effective than enalapril at reducing the risk of cardiovascular death and of hospitalization for heart failure (N Engl J Med 2014;371[11]:993-1004). 

The FDA granted the drug priority review and approved it on July 7, 2015, breaking a drought for a new pharmaceutical treatment for heart failure. Novartis predicted that global sales of Entresto could exceed $5 billion if other regulators followed suit. Uptake instead proved to be sluggish, with 2015 sales reaching $21 million and midyear results for 2016 falling short of the projected $200 million goal. Novartis did not accept an offer to be interviewed for this article.

Some critics of PARADIGM-HF challenged the trial’s use of a run-in phase, an ACE inhibitor instead of a placebo, patient selection and raised safety concerns. More often, though, observers questioned Entresto’s estimated $4,500 annual cost vs. generic treatments that fell below a dollar a day. In 2015, the Institute for Clinical and Economic Review concluded in a draft report that Entresto offered a net benefit to patients with congestive heart failure but that the drug’s list price should be discounted by 17 percent.

“The data is very compelling for offering a very substantial benefit up and above an existing therapy that is of clinically relevant magnitude,” says Gregg C. Fonarow, MD, director of the Ahmanson-University of California Los Angeles Cardiomyopathy Center and a writing committee member of a 2016 update on new pharmaceutical treatments for heart failure. The update gave ARNIs such as sacubitril/valsartan a class I, level B-R recommendation for some patients with reduced ejection fraction, meaning the level of evidence was strong and the quality of evidence was moderate (J Am Coll Cardiol online May 17, 2016).

Fonarow and other researchers have shown that at a patient population level, optimal use of sacubitril/valsartan could prevent almost 28,500 deaths annually (JAMA Cardiol online June 22, 2016). In another study, he and his colleagues determined that sacubitril/valsartan vs. enalapril was cost-effective, with the drug’s costs offset by lower mortality and less hospitalization (JAMA Cardiol online June 22, 2016).

He argues that pharmacy benefit managers who handle formularies have raised barriers to accessing sacubitril/valsartan for financial reasons. “Really, the issue is about how to preserve silo-based budgets and deny access to as many patients as possible and as long as possible rather than having any legitimate concern about appropriate patients being treated.” 

[[{"fid":"22782","view_mode":"media_original","type":"media","attributes":{"height":512,"width":600,"style":"font-size: 13.008px; width: 180px; height: 154px; margin: 5px; float: left;","alt":" - m-sherman","class":"media-element file-media-original"}}]]

When the pieces fit 

Novartis has signaled its willingness to engage in risk-sharing agreements for Entresto, going so far as to state in its 2015 annual report that it wanted to work “with our customers on flexible, performance-based pricing models” that linked compensation with target outcomes. Harvard Pilgrim also had been talking with pharma companies to explore risk-sharing models in an effort to build off outcomes-based agreements it has with physicians. These agreements, which bundle payments or global cost-of-care incentives to outcomes, have made physicians cost-conscious, Sherman says. “[Pharmaceutical companies] are starting to understand not only that cost without benefit is something that is a barrier to adoption by the physicians, but also that these newer models have the physicians thinking more like payers.”  

Harvard Pilgrim already had invested in the medical informatics infrastructure and analytics staffing to roll out its outcomes-based initiatives with physicians, according to Sherman, eliminating technological and logistical barriers that sometimes derail risk-sharing talks with pharma. Entresto also fit another critical clinical requirement: a clear endpoint.

“For outcomes-based payments for pharmaceuticals to work, there has to be a reasonable cause and effect and there has to be data points that are easy to collect,” he says. Harvard Pilgrim knew it could collect data to measure outcomes such as reduced hospitalization and reduced mortality through its claims system.

If the deals proceed as designed, Cigna, Aetna and Harvard Pilgrim will have a better understanding of how Entresto performs in a real-world setting. The downside is, they have no incentive to share that knowledge, Garrison says. Outsiders still may benefit, Fonarow says, particularly if risk-sharing deals chip away at the barriers that he and other physicians have encountered when trying to gain access to the new therapy. 

Sherman sees it as a win for all sides. “High-cost drugs are now a significant issue in terms of driving cost increases, and premium increases for insurers, ultimately making it hard for patients to afford medications,” he says. “By partnering with pharma companies and globally with physicians we think we have an innovative approach to changing the game and using the right therapies in a way that is acceptable to all parties.”

[[{"fid":"22783","view_mode":"media_original","type":"media","attributes":{"height":434,"width":554,"style":"width: 554px; height: 434px; margin: 5px;","alt":" - enalapril-sacubitril","class":"media-element file-media-original"}}]]