Drug Prices Scrutinized

As the existential challenges become starker for health care in the United States, scrutiny over the price of drugs is increasingly the focus of the public and policymakers. The pressure is mounting to provide patient care at a price that rewards therapeutics manufacturers but that is recognized by payers as offering value.

Further complicating matters is the Rube-Goldberg Machine that is the US health system: with diverse and interdependent stakeholders ranging from federal & state governments, to commercial insurance providers, to pharmacy benefit managers, to physicians, and, last but not least, to patients. The complexity of the system obfuscates the link between the list price of a drug set by the manufacturer, net price after rebates and numerous other factors, and the costs and benefits for both society and the patient.

HTAs and the Rise of ICER

Of course, the approach to drug pricing in the US isn’t the only option, and many countries have adopted structured Health Technology Assessments (HTAs) that are intended to quantify the human benefit of a new therapy and convert that benefit into a price.  At face value, this is a noble goal, but controversy emerges when HTA bodies have issued conclusions of “not recommended for use” due to concerns regarding cost.  These may be the right decisions for budget holders, but individual patients are denied access to new drugs.

Over the last five years in the US, the pricing watchdog, Institute for Clinical and Economic Review (ICER), has increasingly gained prominence as an unofficial HTA body, with their reports scrutinizing drug value, while pillorying those therapies that do not justify current prices. Although ICER is not a formal decision-making body, the influence of ICER’s reports is expanding as payers and policy makers are leveraging ICER’s findings to reduce patient access to treatments. As a notable example, CVS Caremark has indicated that it will use ICER cost effectiveness thresholds to exclude drugs from formulary.

Don’t Forget the Patient

With all this complexity, it’s easy to lose focus on the patient. The stakes for the patient may be very high if they are denied access to drugs that are intended to treat serious, or life-threatening conditions because of value assessments.

The stakes may grow higher still as we enter a new era of genetic and biologic medicine, which offers the incredible promise of potential cures, but which come with staggering costs. As these new technologies are introduced, ICER and other value assessment groups have acknowledged that current methodologies may fall short, signaling that these new medicines need new methodologies for comparing high costs with the potential long-term savings that could come with a cure. As these new approaches are developed, careful consideration is needed to ensure that patients are not left behind.

PROs and Cons

While modern HTA methodologies should be commended for a rigorous, evidence-based approach, industry must resist the urge to equate rigor with completeness: quantitative models are unlikely to capture the full complexity of drugs and diseases, especially the spectrum of patient burden.

Patient reported outcomes (PROs) are one approach to quantifying the patient burden that are often used during HTAs. However, the value of PROs varies among stakeholders and validated PROs require time and effort to establish. Furthermore, aggregated PROs, that treat all patients as a homogenous group, may fail to capture the heterogeneity of the patient experience, potentially hiding subsets of responders that may see the greatest value.

This isn’t to say that PROs are not without value. Value assessments must take a quantitative approach and such measures are essential data. Instead, the rise of HTAs and ICER demonstrate that PROs must be taken seriously, revisited frequently, validated and revalidated, and be revised based on qualitative feedback from patients, providers, and caregivers. This is not a straightforward task. However, as such measures are vital to the HTA process, manufacturers will be required to think about PROs earlier in the product development process lest the full benefit of new therapies be lost to the value assessment process.

A Seat at the Table

Best practices for HTA bodies and ICER continue to evolve, but it is encouraging that ICER supports transparency and input from any and all stakeholders. This approach provides a much needed seat at the table for the patient, coordinated by patient advocacy groups that have participated in the value assessment process.

As ICERs influence grows, the US healthcare system has an opportunity to craft the next generation of modern value assessments. To do this, payers, policymakers, providers, and pharma must remember the importance of understanding the needs and challenges of the patient. In addition, because of the convoluted path from a drug list price, to net price, to out-of-pocket cost for the patient, value assessments must acknowledge that patient value and price are frequently uncoupled. Only by focusing on the patient, and fully understanding their journey and perceptions of value, can we maximize value based healthcare.


Vince Panzano, Ph.D.: Consultant, DRG Consulting-Follow him on Linkedin

Heeseon Yeon,PharmD: Associate Consultant, DRG Consulting-Follow her on Linkedin

Darin Kurti: Senior Consultant, DRG Consulting-Follow him on Linkedin 

Interested in more ICER insights and takeaways?


Have specific questions around ICER and other access-related topics? Feel free to reach out to our expert team at questions@teamdrg.com.


Government headed for close to half of nation's health tab

U.S. drug prices don't translate to better health

A Chance to Cure America’s Drug-Price Sickness

Trump Highlights Health Agenda With Vow To Lower ‘Unfair’ Drug Prices

A big PBM wants drug makers to agree to rebate demands that would preserve its bottom line

Will Trump’s new drug rebates proposal end PBMs? And 6 other burning questions about the idea

Flip the Script: Drugmakers Blame Middlemen for Price Increases

Rebates And Drug Costs: What The New Proposal Would Mean

How other countries set their drug prices

Using health technology assessment to assess the value of new medicines: results of a systematic review and expert consultation across eight European countries

Will the Institute for Clinical and Economic Review Evolve as a formal HTA body in the US?

America’s “NICE”?

Will CVS Caremark Make ICER The American NICE?

A Drug Costs $272,000 a Year. Not So Fast, Says New York State.

Novartis Gene Therapy Could Be Cost-Effective Up to $1.5 Million

ICER Launches International Collaborative to Develop New Methods to Guide Value-Based Pricing of Potential Cures

Patient Participation Guide

New Report Finds All Reviewed Psoriasis Therapies a Good Value

With Vertex, NHS back at the pricing table, CF advocates ratchet up the pressure


CMS unveils new alternative payment models targeting rural health and therapy areas

View Now