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TEHRAN, Feb 06 - Novartis AG Chief Executive Vas Narasimhan said his company’s prescription drug prices have been “flat to negative” over the last three years, and directed blame for high costs for U.S. patients on industry middlemen that manage drug benefits.
TEHRAN, Young Journalists Club (YJC) -In an interview with Reuters in New York on Wednesday Narasimhan, a 42-year-old U.S. doctor who has headed the Swiss drugmaker since Feb. 2018, threw his support behind a U.S. government proposal to end a system of rebates drugmakers pay to pharmacy benefit managers (PBMs) and health insurers in order to get products on their lists of covered medicines..
“We (Novartis) pay almost 50 percent of our gross revenues in the United States into rebates,” Narasimhan said. “If you return those rebates to patients, so patients pay less out of pocket, I think that is something that makes a lot of sense and will correct a distortion in the marketplace.”
Narasimhan also acknowledged the industry and company reputational challenges stemming from anger over rising prices, kickback scandals and last year’s revelation that Novartis paid U.S. President Donald Trump’s former attorney, Michael Cohen, $1.2 million.
“It’s hard to call them outlier events, when there’s enough of the outlier events,” he said.
He described efforts to regain respect for the company that now has the world’s highest prescription drug sales as “the great journey of my time as CEO.”
Last month, U.S. Health and Human Services Secretary Alex Azar announced a plan that would end rebates now paid to PBMs and other payers and instead pass along savings to consumers covered by U.S. government health plans. Trump, in his State of the Union address on Tuesday, again called for lower U.S. prescription drug prices.
PBMs, which administer drug benefits for employers and health plans, argue that they are passing sufficient savings to patients and contend that rebates help keep down insurance premiums.
Narasimhan, echoing arguments of many large drugmakers, said the existing system obscures the true price of drugs and leaves patients on the hook, in the form of higher co-pays, or co-insurance payments.
‘ZERO TRANSPARENCY’
He noted that changes in the decades-old rebate system could eventually affect insurance plans offered by U.S. employers, potentially leading to premium hikes.
“We have zero transparency into the billions we pay in rebates,” the Novartis CEO said. “You could see some adjustment in premiums. But I think that’s another area where we should get transparency.”
Novartis, which had 2018 global sales of $51.9 billion and net profit of $12.6 billion, gets more than a third of its revenue in the United States. But despite all the talk about rising list prices, Narasimhan said since 2016 net prices for its prescription drugs fell about 1 percent.
“At Novartis, we no longer see net price growth as a meaningful contributor,” he said.
Instead, the company is counting on recent and upcoming launches of new drugs to fuel 2019 growth of 4 percent to 6 percent, a forecast Narasimhan reiterated on Wednesday.
Since his elevation to CEO last year, Narasimhan sold off over-the-counter and generic drugs units and plans to spin off the Alcon eyecare business before July as he focuses on new, often very pricey transformative treatments.
These include a gene therapy for spinal muscular atrophy, a one-time treatment Novartis has said could be cost-effective at up to $5 million per patient, and Kymriah, a CAR-T cell cancer immunotherapy with a list price of $475,000.
Source: reuters
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