Dallas, Texas 07/21/2015 (Financialstrend) – Novartis AG (ADR) (NYSE:NVS) might have made a breakthrough on its push to reduce the rate of hospitalization as well as cardiovascular deaths thanks to the FDA approval of its drug Entresto. The company believes the drug could be a blockbuster in the sector, sure to have a big impact on its earnings. The company expects sales in the excess of $5 billion should the drug receive approval around the world.
Cost Constraints Concerns
The only barrier to its adoption could be its price of $12.50 per patient a day which is relatively expensive compared to other products that cost less than a dollar a day. Novartis AG (ADR) (NYSE:NVS) is also considering offering additional services on top of the drug so that physicians could be able to monitor patients using the drug remotely.
The approval is a big achievement for Novartis AG (ADR) (NYSE:NVS) having spent heavily on clinical trials covering more than 8,000 patients. The approval should help offset some of the concerns regarding a lack of blockbuster drugs to deal with the ‘patent cliff’ problem as older drugs continue to lose their exclusivity
Head of Novartis AG (ADR) (NYSE:NVS) Pharmaceutical division believes patients diagnosed with heart failure have a chance of living longer thanks to what Entresto has to offer. The company has already filed for approval in some countries around the world as it moves to outsource new markets for its new blockbuster.
Proposed Pricing Models
Novartis AG (ADR) (NYSE:NVS) is also discussing with a number of insurers about the probable pricing models for Entresto. One of the discussed models involves insurers getting partial refund should the drug fail to produce the desired outcome. The insurers will also be eligible for bonuses should the drug exceed its expectations on patients.
The awarding of bonuses as well as refunds have become increasingly common in the US as pharmaceutical companies try to prevent insurers from balking from expensive drugs.