After a slow start, Novartis finally gains market traction with heart drug Entresto

When Novartis launched its heart failure drug Entresto two years ago at a list price of $4,600 a year, it was in for a tough fight.

The market was dominated by generic drugs, so the pricey new entry didn’t sit well with pharmacy benefits managers and insurers—despite ringing endorsements from the American College of Cardiology, the American Heart Association and the Heart Failure Society of America, all of which recommended that physicians switch their patients to Entresto.

Now the tide is finally turning in Novartis’ favor. In the company’s recently announced second quarter earnings, sales of Entresto skyrocketed 244% year over year to $110 million, beating the consensus analyst estimate of $105 million. During a conference call with investors after the earnings release, Novartis CEO Joe Jimenez said the product is on track to reach sales of $500 million this year.

Entresto is still a long way from the more than $3 billion peak sales analysts are expecting, but the recent market traction is a good sign. Novartis reported that only about 40% of Medicare patients need prior authorization to get the drug now—a vast improvement over the first quarter, when two-thirds of patients needed that green light. The downward trend in prior authorization requirements is a major positive, because as Bernstein analyst Ronny Gal said in a note to investors, "any paperwork is a material barrier to [a cardiovascular] product."

To boost the Entresto launch, Novartis has been churning out data showing the benefits of the product. In March, for example, it presented a new analysis of data from the pivotal trial, which were first published in 2014. The results, from 3,778 trial participants with diabetes, showed that patients taking Entresto had a 0.26% drop in HbA1c, besting the 0.16% drop among those taking an older drug for heart failure called enalapril.

Novartis also launched 40 new studies of Entresto in a clinical program it calls FortiHFy. Researchers are testing the drug in pediatric patients with heart failure and assessing the med for its ability to improve exercise capacity in adults with heart failure, and more. Many of the trials are comparing the new drug with enalapril, which has been available as a generic for pennies per pill since 2000.

The short-term improvement in access to Entresto is likely coming from Novartis’ willingness to negotiate, however. The company made waves last year when it set up pay-for-performance deals with insurance giants Cigna and Aetna. The company established a base rebate rate and then guaranteed the health plans that if hospitalizations and other costly events among Entresto patients didn’t go down, Novartis would hike up the rebate.

Novartis has been talking up pay-for-performance overseas as well. The company’s U.K. unit recently sponsored a study by the Social Market Foundation in London, which concluded that the country’s National Health Service should switch to an outcomes-based reimbursement model.

During the recent earnings call, Jimenez noted that Novartis is "continuing to make progress on reimbursement" of Entresto overseas. And here in the U.S., the copay for more than half of Medicare patients is now less than $10—another attribute that could lure patients away from cheap generics.

Will it all be enough for Entresto to hit the $6 billion in peak sales that some analysts had hoped for when the product made its debut? Probably not, but it’s a turnaround that Novartis investors have welcomed: The company’s stock has risen 15% since the start of the year to $84.