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

Growing role of ICER in the value-driven healthcare system

The U.S. healthcare system is unique in many ways, with one key differentiator being the absence of a formal health technology assessment body responsible for evaluating new drugs for their cost-effectiveness. Unlike many European countries, where a designated HTA determines the value of new drugs, the U.S. relies on multiple stakeholders (pharmacy benefit managers, payers, providers, and manufacturers themselves) all of which have different measures to determine the value of new products. The decentralized healthcare system, coupled with the lack of regulatory policies pertaining to drug pricing, have led to soaring drug costs in the U.S.

As payers and policy makers have begun to increasingly scrutinize prescription drug prices, ICER, a U.S.-based organization adept in developing tools used to analyze comparative effectiveness of drugs, has been gaining considerable attention. The organization brings together publicly available information, clinical trials data, and other manufacturer-provided specifics to conduct pharmacoeconomic analyses that can inform payers and policy makers. ICER has aimed to fill the void of a designated HTA in the U.S. and has established itself as a quasi-governmental body in the country over the last decade. The extent of adoption and/or rejection of ICER metrics by healthcare stakeholders (PBMs, Payers and Pharma) and the implications of these decisions on the pharma industry are discussed below:

Payers:

According to ICER, around 59 percent of payers in the U.S. use ICER’s reports as part of their formulary decisions (as per data presented at ISPOR - 20th Annual European Congress). From a payer perspective, comparative analyses indicating that a drug does not meet cost-effectiveness benchmarks provides a transparent rationale for why certain products aren’t covered by the plan. Given the rising drug costs in the U.S., it is expected that payers will adopt ICER metrics readily.

It is noteworthy that ICER's assessments of medicines are based on clinical trials carried out in a controlled setting, while payers operate in a more complex environment. This issue can give rise to reliability issues while implementing ICER’s assessments for private payers.

PBMs:

CVS/caremark’s decision to allow its clients to exclude drugs from their formularies that do not meet cost-effectiveness benchmarks set by ICER sent ripples through the drug industry. The PBM said that it will use ICER measures, such as Quality Adjusted Life Years, to gauge the cost-effectiveness of prescription drugs. CVS’ decision can influence the pharmaceutical launch prices; so far, only manufacturers have had complete control over the launch prices of new therapies in the U.S. This approach could change manufacturer behavior by influencing how companies initially price new drugs and perhaps even where they decide to invest their research and development dollars.

Given the size of the PBM and the anticipated merger with Aetna—slated to complete by the end of 2018—this move will have a significant impact on patient access to high-cost therapies, especially where cheaper alternatives are available.

As middlemen in the drug supply chain, PBMs are under constant attack by both drug manufacturers and policy makers. Employing non-legally binding metrics, such as those of ICER that are free of conflicts of interest from pharma or insurers, will provide an effective tool for PBMs in managing drug costs. In the near future, it is likely that other PBMs will follow suit and employ ICER metrics while deciding on formulary coverage of expensive drugs.

Pharma:

The pharma industry has had a strained relationship with ICER, as the organization draws attention to high-cost drugs and questions their clinical and economic value. For example, ICER determined that Vertex pharma’s cystic fibrosis drug Orkambi, priced at $272,000, was four times more expensive than the benchmark set for cancer drugs. Based on ICER’s analysis, the state of New York asked for a 70 percent reduction on the drug price. Vertex did not agree to the request, but it is apparent that the pharma company’s sales will be negatively affected because of these clashes.

It is interesting to note that formal HTA bodies in the UK, France, the Netherlands, and Canada have all denied access to Orkambi. ICER playing a role in formal Medicaid reimbursement decisions is an indication that more and more pharmacoeconomic analyses will be employed in the U.S. at the federal level. President Trump’s recent proposal to establish an “international pricing index” plan and to pay for Medicare Part B drugs based on their price tags in other developed countries reinforces this shift.

Pharmaceutical Research and Manufacturers of America, the powerful lobby representing pharma companies, has expressed concerns about the application of ICER’s measures in formulary decision making, stating that ICER uses one-size-fits-all cost effectiveness thresholds to determine economic value of drugs, which could be detrimental to patient access to life saving drugs. The organization notes that using generic cost-effectiveness thresholds overlooks individual patient needs and conflicts with the movement toward personalized healthcare. The organization has also argued that having therapeutic alternatives on the formulary is necessary because patient response to drugs within the same class can vary on an individual basis.

Some drug companies, however, have incorporated ICER assessments in building their value stories for specialty drugs. For example, Sanofi and Regeneron’s market access strategy for Praluent (specialty cholesterol-lowering agent) was based on an ICER analysis.

With ICER emerging as an influential body in the country, the implications for drug manufacturers are clear: the companies need to bring innovative products to the market at reasonable costs. If drugs are not clinically differentiated and are priced too high, they could fail to meet the ICER benchmark resulting in rejection by payers as well as government bodies.

Expect ICER’s influence to continue to grow

As the concept of value-based reimbursement gains more traction in the U.S. healthcare system, ICER’s influence is expected to grow. ICER has been receiving substantial grants from nonprofit foundations (e.g., in November 2017, ICER received a nearly $14 million grant from the Laura and John Arnold Foundation) to focus on initiatives such as reviewing data pertaining to new therapies, identifying unjustified price hikes, and developing innovative reimbursement programs. Whether ICER evolves into a formal HTA body in the U.S. or not, what is clear is that the organization will continue to be a key influencer within the value-driven healthcare system.

Shruti Desai is a pharmacy benefit market expert, and her work can be found in DRG’s PBM Profile series.


Contributor: Shruti Desai - Pharmacy benefit market expert
Published on: 08 November, 2018