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ICER’s Growing Influence on Drug Value

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The Institute for Clinical and Economic Review (ICER) has grown to become a leading voice on drug pricing in the US.  As the emphasis on value in the US health care system and concern over high drug prices continues to grow, more stakeholders are likely to look to ICER for guidance on whether a drug is appropriately priced.

ICER was founded in 2006 by Dr. Steve Pearson, an ethicist from Harvard Medical School, with the goal of improving value in health care.  One of the main ways ICER seeks to carry out this mission is by publishing reports on whether new drugs are cost-effective.  Using both economic and clinical evidence, ICER determines a “value-based price benchmark” for each drug it studies based on the based on how much a patient’s quality of life improves.   While ICER does take some membership-based funding from companies including CVS-Caremark and Pfizer, the organization does not accept funding to perform research on specific drugs or therapies.

ICER’s influence began to grow in 2015 thanks to financial support from billionaire John Arnold, who provides the organization over two-thirds of its funding.  Now, the organization plays a critical role in driving the national conversation on drug prices and value.   Only a third of ICER’s reports have found a drug to be cost-effective and appropriately priced, and in response, many drug companies, payers, and providers have adopted some of the organization’s pricing recommendations.  For example:

  • CVS Health allows its commercial plan clients to exclude drugs from their formularies that fail to meet ICER’s cost benchmarks.
  • Novartis set the price of its gene therapy drug Zolgensma in line with ICER’s recommendations.
  • The Department of Veterans Affairs uses ICER drug assessment reports in drug coverage and price negotiations with the pharmaceutical industry.
  • ICER’s cost effectiveness reports on PSCK9 inhibitors, which are used to manage and prevent cardiovascular disease, drove annual list prices down from $14,600-$14,100 to $5,850.
  • A report by ICON plc found over a third of payers surveyed would be likely to request a rebate to match the net ICER cost-effective price.

ICER isn’t without criticism.  As a private organization, ICER has drawn concerns from patient advocates and physicians for its lack of oversight and regulations.  Additionally, the organization has faced pushback over the use of its quality-adjusted life years (QALYs) formula, which estimates a drug’s dollar benefit.  Some patient advocates say QALY determines costs in a discriminatory manner because the formula assigns individuals with a chronic condition or a disability with a lower value.  Notably, the federal government is prohibited from using QALYs to measure cost-effectiveness under the Affordable Care Act.

In the future, Cost-effectiveness itself is a complicated concept in light of growing trends:  ICER could impact health care based on growing trends:

  • A heightened focus on health disparities could prompt ICER to review how different therapies affect certain demographic groups.
  • In the oft-chance the US adopts a public health insurance option or even a single-payer system, ICER could play a greater role in dictating cost-effectiveness.  For example, the United Kingdom-equivalent of ICER has significantly more clout in the country’s National Health Service.
  • ICER may be forced to adjust its methodologies to address the growth of personalized medicines such as cell and gene therapies, which benefit a relatively limited number of individuals compared to therapies the organization has traditionally studied.

Furthermore, if the US adopts a public health insurance option or even a single-payer system, ICER could play an even greater role in drug coverage and pricing.  The United Kingdom-equivalent of ICER has direct decision-making authority within the country’s National Health Service.

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