We have previously written about the Institute for Clinical and Economic Review (ICER), the independent watchdog whose mission is to offer an objective evaluation of the clinical and economic value of prescription drugs, medical tests, and other healthcare innovations.
Many European nations have governmental or quasi-governmental agencies, like the United Kingdom’s NICE (the National Institute for Health and Care Excellence), which exert considerable influence on drug coverage by providing evidence-based analyses and pricing benchmarks on the cost-effectiveness of drugs and medical technology. While ICER evaluations are not as binding as some of their European counterparts, recent events are now bolstering this group’s influence over pricing and reimbursement in the United States.
ICER has formed an advisory group to help develop an annual report on U.S. drug price increases. The goal of the report is to offer an explicit, independent analysis and evidence-supported, value-based price benchmarks to determine whether price hikes on older drugs are supported by new clinical evidence or other factors. The initial report is due for publication in Q1 2019.
In August, CVS Health also gave ICER a further boost in influence — and its first formalized role — concerning drug pricing and coverage decisions. The pharmacy benefit manager (PBM) announced that it would allow its Caremark clients — health plans, self-funded employer groups, and similar entities — to exclude drugs from formularies that do not meet an ICER analysis benchmark of $100,000 per “Quality-Adjusted Life Year” (QALY). This move by CVS is aimed at influencing how manufacturers initially price new “me-too” drugs, and it specifically exempts drugs that the U.S. FDA has designated as “breakthrough” products. CVS hopes that its action will help influence how companies initially price new drugs, as well as where they invest their research dollars.
For insurers and employers, the CVS decision to rely on ICER analyses provides a transparent rationale for why certain products are not covered by a particular health plan. To gain access to those not-covered drugs, patients will need to lodge appeals or go through a grievance process with their plan.
Patient groups have rebuked CVS on its ICER decision, urging the PBM to reconsider. They say that if CVS allows its clients to make decisions based on cost-effectiveness reviews, such decisions will discriminate against the chronically ill, elderly, and people with disabilities by relying on algorithms that calculate these lives as worth less than those of people who are younger and not disabled. Pharmaceutical manufacturers have similarly complained that blunt cost-effectiveness thresholds ignore factors that individual patients and health care providers value and conflict with modern medicine’s movement towards personalized healthcare.
CVS and ICER responded that the QALY standard is not discriminatory and, in fact, will improve the chances for patients with serious illnesses or disabilities to access treatments they need at a price the health system can afford. According to ICER, patient populations who start out with a lower quality of life actually represent an opportunity for treatments to achieve a significant improvement in the QALY metric — and thus more easily meet the $100,000 QALY benchmark.
Will other PBMs join CVS in its decision to give ICER analyses a formal role in drug coverage decisions? How will relying on such cost-effectiveness benchmarks ultimately affect Medicare/Medicaid coverage? What will be the true impact of ICER-influenced coverage decisions on patients, especially for illnesses where variations in how patients respond to different drugs are commonplace and one-size-fits-all decisions can be truly problematic?