has spent the past two years buying up cutting-edge science. His latest deal is a high-stakes bet that the Swiss health-care giant will succeed where many have struggled: launching a new heart drug.
Cardiovascular diseases are the number-one cause of death in the U.S., but new drugs for conditions like high cholesterol and heart failure have proven tough to sell. They compete with a bevy of older, cheaper drugs, and cardiologists typically want to see evidence that patients benefit in the long run before fully embracing them.
Novartis’s own Entresto, for heart failure, has taken several years to gain widespread acceptance among cardiologists. At $1.2 billion in the nine months to September, sales still fall well short of the $5 billion a year that analysts predicted before the drug’s launch.
A Disheartening Market
More people die from heart disease than
cancer in the U.S.
Chronic lower respiratory disease
But new heart drugs are struggling.
Dr. Narasimhan is wagering that the cholesterol drug at the heart of the planned $9.7 billion acquisition of
will do better, predicting that it could become what he calls a “mega-blockbuster.”
Investors cautiously welcomed the deal, sending shares up 1.2% Monday, the day after the companies announced the deal.
an analyst at Bank of America Merrill Lynch, said in a note to clients that the drug would need to hit $3 to 4 billion in peak annual sales to justify the price tag, which is a challenging goal: Two similar drugs are forecast to peak at around $2 billion a year.
The drug, inclisiran, uses an innovative approach to target a protein implicated in the buildup of cholesterol. The two similar drugs, Repatha and Praluent, that target the same protein have failed to meet analysts’ expectations as insurers balked at their high price tags and threw up barriers to patients who wanted them.
Two 2017 studies sponsored by Repatha-maker
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found that around 80% of U.S. prescriptions for the two drugs were initially rejected by insurers, and more than 50% were rejected after appeals.
Dr. Narasimhan told analysts in a call that inclisiran can avoid those pitfalls partly thanks to differences in how pharmacy and hospital drugs are paid for in the U.S.
Inclisiran is given to patients by injection in hospitals, whereas its two rivals, taken by self-injection, are dispensed at pharmacies.
It is an important difference. Insurers can steer patients away from pricier drugs at pharmacies by imposing higher copays or heavier paperwork. They have fewer tools for controlling the use of drugs given by doctors in hospitals.
At the same time, insurers can place restrictions on the use of hospital drugs, too. One tactic, known as prior authorization, requires patients to show that cheaper therapies don’t work for them before insurers grant access to newer, pricier drugs.
Insurers “can, if they want to, put some limitations in use,” said
managing partner for pharmaceutical value and access at ZS Associates, a consulting firm.
That means the success of inclisiran—expected to go on sale in early 2021—will likely hinge on price.
Repatha and Praluent both went on sale at around $14,000 a year but were later reduced to $5,850 to win acceptance from insurers.