Drugmaker Eyes Reinsurance to Lower Costs, Reports Financial Times

Swiss drugmaker Novartis AG is considering working with reinsurers to provide alternative financing options for life-saving drugs, potentially saving substantial healthcare costs, Financial Times reported on Sunday.

Among the options proposed includes a “reinsurance model in which a third party underwrites the catastrophic case of a child having one of these conditions,” Novartis Chief Executive Officer Vas Narasimhan told the FT in an interview.

Reinsurers, which already provide a backstop to employer health insurance plans, could benefit from this new revenue amid increasing competition from rival sources of risk capital, the FT said. Reinsurers could pool the costs of treatments by different drug companies across countries.

Discussions about funding the next generation of therapies — which may require a single infusion but at a high cost — are at the concept stage and the “reinsurance option” could work for state-funded health systems such as in the U.K., as well as private insurance-based systems, the newspaper reported.