Mounting Attack on Drug Pricing: Will ICER Be the De Facto NICE in the U.S.?

In recent days there has been a tsunami of reports and analyses accusing biopharma companies of gouging consumers and bankrupting the nation’s health care system with unacceptably high prices on new therapies. Oncologists are livid over soaring prices for new cancer drugs, which now normally top $100,000 a year, as seen in an editorial in the Mayo Clinic Proceedings signed by 118 physicians that urges policies to halt the rising prices.

Researchers at Carleton University and Public Citizen’s Health Research Group announced a study showing that Medicare Part D drug prices are more than twice those in other industrial nations, a finding that aims to bolster the campaign to authorize government negotiation of drug prices for Medicare.

The anticipated FDA approval of important new drugs to mange cholesterol, which could be utilized by millions of patients, has set off pre-emptive strikes by payers and insurers to limit indications and prescribing of these PCSK9 inhibitors, which are expected to cost $7,000 to $12,000 a year. That’s much less than most specialty and oncology treatments, but way more than currently available cholesterol meds.

A real game-changer is the announcement by the Institute for Clinical and Economic Review (ICER) that it has received a $5.2 million grant to expand its analyses of the cost-effectiveness and comparative-effectiveness of new drugs. This Massachusetts-based research institute has been producing independent clinical assessments on the effectiveness and value of medical treatments and tests for about eight years, with support from the New England Comparative Effectiveness Public Advisory Council (CEPAC) and the California Technology Assessment Forum (CTAF). It also is in the process of finalizing a value assessment “framework” to guide payer assessment of the value of drugs, medical devices and medical procedures.

The new funding from the Laura & John Arnold Foundation will shift ICER’s focus largely to drugs. The plan is to produce 15 to 20 reports a year that analyze new drugs to coincide with FDA approvals, as well as some existing, high-impact products. Its independent assessments will address “soaring drug prices” and questions about the true value of new cancer therapies and treatments for important diseases that “have the potential to significantly change patient care and health system budgets.” ICER says that for each drug, it will use transparent methods to calculate a value-based price benchmark that relates to real benefits of the drug for patients.

“We need prices that make sense,” said ICER president Steven Pearson. He envisions creating create a clear path to evaluating innovation “that makes a difference for patients while making the overall costs of drugs in the health care system a better value.” Many new cancer drugs carry annual prices of over $100,000, but may offer little gain in performance compared to what is already on the market. Each report will include an analysis of how drugs work (comparative effectiveness) and their value to patients (cost-effectiveness and budget impact).

This focus on drug value raises comparisons between ICER and the National Institute of Health and Care Excellence (NICE) in the United Kingdom, which has the official task of evaluating whether new drugs and medical products are sufficiently cost-effective to warrant coverage by the UK National Health System. Market approval of a new drug by the European Medicines Agency (EMA) is only the first step for a new drug to reach the market in Europe and most other nations; national health programs also have to authorize reimbursement and coverage.

Whether a new drug passes muster at NICE depends on its price, as well as efficacy in treating disease. A positive recommendation often involves negotiations with manufacturers to obtain value based on qualify-of-life scores. NICE recently announced that it was recommending NHS use of Boehringer Ingelheim’s new lung cancer therapy Vargatef and Novartis’ Cosentyx for plaque psoriasis, but only at agreed-on discount prices, and it turned down coverage for some other medicines.

Similarly, ICER aims to provide an assessment of a product’s value that will influence health plan price negotiations and coverage decisions. Pearson hesitates to draw too many parallels between ICER and NICE, emphasizing the need for “an American way” to provide analyses that capture long-term, downstream effects of new therapies.  An important function for us, he says, is to “create an environment for better dialogue about value.” A new drug may be particularly effective with different patient subgroups, he notes, and expects that “some observers may be surprised that we may find a very expensive drug will have a very high value.”

ICER will be expanding its drug evaluation program considerably. It already has in the works new evaluations of  PCSK9 inhibitors for cholesterol and Novartis’ new congestive heart failure treatment Entresto; draft reports are scheduled for release in September and final reviews in October. Pearson will be announcing future topics on a rolling basis, but expects to be looking at new drugs for cancer, asthma and diabetes. There are plans to form a third public review panel (in addition to CEPAC and CTAF), possibly a virtual program for the whole country to recommend and review drug analyses. ICER will work with all stakeholders to identify new drugs where the value evidence will be controversial and where the budget impact may be quite high; for existing drugs, the focus will be on products where evidence on effectiveness, patient populations and prices raise issues about value.

ICER gained attention last year by issuing an analysis questioning the cost-effectiveness of new treatments for Hepatitis C as of November 2014. In February 2015,though, the Institute published an addendum that found Gilead’s Solvaldi and Harvoni “represent a high value” in patient care at now-discounted prices, which were roughly half the initial cost. The “short-term affordability was the real issue with these drugs,” says Pearson.

This re-evaluation process is a positive sign for biopharma companies, in that it reflects a willingness of ICER to revise opinions as value considerations of new therapies change over time. ICER has involved all stakeholders, including pharma, in developing its value framework, says Kimberly Westrick, vice president of the National Pharmaceutical Council (NPC), noting that ICER has implemented “a long, transparent process that has looked at value very thoroughly.” But she and others are wary of how objectively the framework assesses the budget impact of a new therapy on health systems, which has not gone through such a rigorous vetting process. And many cost-effectiveness analyses focus on the initial impact of a new therapy and ignore the fact that most medications really start to have real benefits for patient outcomes and costs two to five years out.

Pearson points out that ICER informs the manufacturer when it plans to evaluate its product and seeks to engage the company early on to fully understand the evidence. Now more pharma companies are looking to learn more about ICER’s methods and how it will evaluate their products. He acknowledges high concerns among manufacturers about its program, but is optimistic that ICER will have a process where “we can learn from each other.”