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Novartis : the value pricing challenge

Novartis CEO Vas Narasimhan spoke with J.P. Morgan analyst Richard Vosser and the part on value based pricing in pharma is especially interesting.

Novartis CEO Vas Narasimhan spoke with J.P. Morgan analyst Richard Vosser and the part on value based pricing in pharma is especially interesting ;

“I think there’s good initiatives around the world, including in the US, to demonstrate the value of value based care,” Narasimhan said.    Still, it’s one thing to talk about value-based care, but another to actually implement it. Doing so will likely be a challenge, he suggested. “We’ve had a lot of learnings when we look at value-based pricing,” he said.

Putting value-based pricing in place in heart failure, for example, turned out to be incredibly complicated for Novartis. For example, methods need to be implemented to monitor how patients are doing over time, and it requires significant investment, particularly in database systems.   Last year, the Centers for Medicare and Medicaid Services quietly pulled out of an outcomes-based reimbursement arrangement for Novartis CAR-T cell therapy, Kymriah (tisagenlecleucel), in pediatric acute lymphoblastic leukemia.

Another important aspect of value-based care is independent organizations to assess value, Narasimhan said, in response to a question about them from Vosser that alluded to the National Institute for Health and Care Excellence, or NICE, in his native UK. “Having independent arbiters helps the story in the long run and helps explain for us as an industry why drugs are priced the way they are,” Narasimhan said.

Indeed, he said one of the biggest things he has learned in the past year was how little understanding there was among the public of the concept of value versus the upfront price of drugs, adding that the industry would need to do a better job at educating people.

Read the full interview here

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