Calling the Shots?
How influential are the value assessments from bodies like ICER?
The USA has the highest drug costs in the world, and they are increasing at the fastest rate too. With one in five Americans saying they have been forced to leave a prescription unfilled due to high costs, the situation is clearly unsustainable.
Payers and pharmacy benefit managers (PBMs), themselves facing increased criticism for blocking access to important medicines, are taking action by demanding that pharma companies justify the cost – and value – of their new medicines.
“There is a point where a government, an employer or a healthcare plan has a finite amount of resources to spend,” says Brian Henry, VP Corporate Communications, at Express Scripts. “As a PBM it is our job to make sure that a payer gets every dollar of value from a medicine. We are not afraid to take on the big challenges; that’s not saying ‘No’ to innovation, it’s saying ‘Yes’ to making it more affordable. We have an opportunity to really bend the cost curve here and change it.”
“What biotech and pharma have brought to market is amazing – incredibly advanced medicines that are helping to cure and treat diseases that we never thought possible. But if innovation is not accessible then it really isn’t innovation at all.”
He says payers have reached their upper limits in terms of budgets and the situation has become unsustainable. “If it keeps up we may not have a drug industry in the next 10 to 15 years that looks anything like what we have today,” he warns.
Who To Trust?
In such a high-stakes game, payers are reluctant to take pharma’s analysis of its data on trust, so many are seeking third-party value assessments.
In May, Express Scripts, one of the largest PBMs, announced it had won a large discount on the PCSK9 cholesterol drug Praluent, made by Sanofi and Regeneron. It is understood the new price is significantly below the $14,600 list price, somewhere between $4,500 and $8,000 a year. While such discounts are hardly uncommon, it was also reported that the lower figures are in line with recommendations made by the Institute for Clinical and Economic Review (ICER), an influential drug evaluating group based in Boston.
While it is clear such evaluations are being used in negotiations between payers and pharma, they are rarely used in isolation, says David Dross from global consultancy, Mercer. “They’re additional ammunition and can help PBMs to avoid being viewed as the bad guys. For example, CVS Health and some of the others are using [these analyses] on a somewhat limited basis because, generally speaking, they already have the clinical resources to make a decision on any given drug.”
At present, the impact of third-party value analyses is being felt in formulary decisions not in pricing. “I am not aware at this juncture how successful these have been in terms of negotiating price point but it seems [a drug] won’t be included if the assessment determines that the value it brings is nowhere near the cost associated with it. The PBM would then simply say it’s just not covered.”
An Unwelcome Guest
Pharma companies may not be the only critics of ICER and similar bodies, but their voices are amongst the loudest (see box, Trust me, I’m ICER).
For Dross, pharma should get over its “significant angst” about third-party value assessments and adopt a more pragmatic approach. He adds that, for the most part, clinicians believe the methodology used by ICER is reputable and makes sense – and if the process is legitimate then so too are the associated outcomes.
He points to a new program introduced by CVS Caremark that allows clients to exclude any non-breakthrough drug launched at a price greater than $100,000 per QALY. There is a common consensus that drug companies will begin to moderate their launch prices if more PBM clients adopt such programs, he adds.
Inevitably, compromise will be required, he says. “What may come out of this is an increase of ‘in-between’ solution such as value-based contracts. If the client pays for an expensive drug and it doesn’t have an impact there is currently no recourse, but now employers and PBMs are saying that if it doesn’t hit the clinical markers within the identified time-frame then the pharma company owes X amount of dollars back to the plan sponsor.”
Express Script’s Henry concurs: “Why should I pay the same amount for a drug that works really well for one population but doesn’t work so well for another? We have seen this in cancer drugs, where you might have a drug that’s indicated for lung cancer and provides 16 weeks of survival, for example, but is also indicated for liver cancer yet only provide four weeks of survival. Why should I pay the same amount for 16 weeks versus four weeks? It doesn’t make any sense.”
He says pharma increasingly understands that they cannot offer a single one-price-fits-all approach. “Regeneron and Sanofi saw what was happening in the market place and understood that having a discussion with ICER and payers ahead of time was important. This is when you begin to get more responsible pricing.
“We are not saying these drugs are low cost by any means but we are certainly saying they are more responsibly priced, especially when these companies are coming to market with drugs that are one of kind and, in theory, they could charge whatever they want to.”
He applauds companies for being responsible. “It’s not applause for a low price, it’s applauding them for their approach to make sure that their drug is affordable and accessible for everyone who needs it.”
Express Scripts is in constant negotiations and points to the company’s SafeguardRx suite of programs as an indication of the direction the market is moving, where ICER’s analyses are just one of many data points used. The suite uses a combination of the company’s own expertise, built over the 32 years of interacting with the 83 million people who take medicines in the US, combined with independent analyses that produce a rich data set and deep understanding of what cost-effectiveness should look like.
“First and foremost, we look at whether the drug works, does it do what it says it will, and is it clinically a good option for patients? We rely on independent experts to give us their counsel on that. This is where ICER has a growing influence, as it’s about shaping the debate and shaping the way people thing about what drugs should cost.”
Will the work of independent value evaluations ever become centralized in the US? “It is hard to predict if we’ll get a NICE-like body in the US but the bigger point is that people are fed up of paying a lot for their medicines,” says Henry. “When drug companies continue to raise the price of their drugs we need to have more information, more data, more independent third parties, more of the tools that we bring to the table to help rein in the costs to make drugs affordable.”
He concludes that the future might well see payers covering fewer drugs on their formularies, as multiple drugs for similar conditions are pared down, while maintaining the over-riding principle that people must always be able to afford the medicines they need.
Box: Trust me, I’m ICER
To those based in Europe, a central body carrying out rigorous health technology assessment of new drugs feels familiar and perhaps sensible. However, in the US, the situation is far from settled.
Founded in 2006, ICER describes itself as “an independent and non-partisan research organization that objectively evaluates the clinical and economic value of prescription drugs, medical tests, and other health care and health care delivery innovations.”
However, with funding flowing from healthcare plans, pharmaceutical companies, investment firms and non-profit organizations, its independence is routinely challenged. What’s more, although ICER says it is committed to engaging all stakeholders in a thorough and transparent manner, its methodology and working practices have been criticized.
As example is a report published by the Institute for Patient Access (IfPA) in April entitled The ICER Myth. The report concludes: “Perhaps the organization’s biggest drawback is its suggestion that the value of life-altering drugs for individual patients can be lumped into a ‘one-size-fits-all’ calculation. ICER’s ‘value-based price’ is a fallacy, and a dangerous one. In the hands of health plans, these prices can become negotiation tools. If drug manufacturers don’t meet health insurers’ demands, coverage policies may put new drugs out of patients’ reach.”
The report claims ICER does not determine a drug’s actual value for a patient based on individualized preferences and health needs. Key failings include: not including include all pertinent clinical-trial and real-world data; not sticking to assessment methods that can be replicated by other analysts; and, not using metrics that accurately reflect the quality-of-life issues that matter to individual patients.
The Institute called for a “transparent, dynamic ratings system and the removal of value-based benchmark – on of the mainstays of ICER’s analyses – from all evidence reports.”
Head In The Sand?
ICER has also drawn criticism directly from pharma, with both Bristol-Myers Squibb and Amgen recently publishing rebuttals of its review of their drugs.
Vertex has gone further and refused to engage with the process at all after receiving a demand by New York’s Medicaid board in April for a hefty 70% discount on its cystic fibrosis drug, Orkambi, on the back of a report from ICER saying the drug should cost in the region of $83,000 rather than the company’s price of $250,000.
“It is the doctors who care for patients rather than the health economists who should be making these decisions for patients,” says Rob Clark, Associate Director at Vertex. “Ultimately, there is very broad access to patients in the US and a recognition with payers of the value these drugs bring to society. Vertex will vigorously oppose any attempt by ICER and any others who seek to derail our attempts to develop new breakthrough medicines and ultimately cure CF.”
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