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Expect More From... ICER!

Writer's picture: Christine JohnstonChristine Johnston

Why aren’t alarm bells ringing with the news of 2023 drug launch prices exceeding expectation? Is it because we have reset our expectations, and this is the new normal? Do we justify the exorbitant costs because when scanning the list of drug launches the costliest offenders are for rare and orphan conditions, so we assume it must be worth it or the outliers are skewing the entire picture? This year is different. Why? Previously some of those prior reasons might explain why the price hikes exceed usual inflation, but experts in the field are at a loss with the most recent data.  An example is evidenced by Dan Ollendorf, chief scientific officer at the Institute for Clinical and Economic Review (ICER), who was recently quoted "…prices are just going up and up without any clear rationale as to why,…”



We respectfully disagree with the “no clear rationale” comment. Yes, we can point fingers to federal governmental policies from Medicare’s Best Pricing initiative to the removal of the lifetime cap in Obamacare or several other state policies that created an unintended negative consequence in skyrocketing drug pricing. However, one simple explanation exists. The US lacks a central drug pricing control mechanism. Other developed countries such as Canada (CADTH) or the UK (NICE) include cost effectiveness within in their drug approval process.


Our country has a similar agency as CADTH and NICE called the Institute for Clinical and Economic Review or ICER. ICER is a non-profit, non-partisan organization that independently evaluates the cost effectiveness of drugs.  At times, I hear or see ICER recognized as the US standard for determining a fair price for the drug based upon how well it works to improve a patient’s quality of life and/or improves the amount of time someone survives with that disease. A prime example is a drug posed to receive FDA approval in March 2024, sotatercept by Merck.  This drug is highly anticipated since pulmonary arterial hypertension is a devasting disease with a grim 5-year survival rate of ~60% per Sotatercept for the Treatment of Pulmonary Arterial Hypertension | NEJM . The price will not be publicly released until after approval but is expected to exceed $100k annually based upon the other drugs available in the market for this condition. ICER’s evaluation states the fair-market price should be between $17,900-$35,400.

 

As it stands today, ICER is simply a tool that can be utilized at times by policy makers, insurer coverage or even public outcry, but it is not as influential in establishing fair-market prices as one may hope. ICER lacks regulatory authority, i.e. it is not involved in the FDA drug approval process. Safety and efficacy are the only two FDA standards. No cost effectiveness or even value over the existing available products is required for entry into the US market. Even a standard definition widely utilized throughout the world, QALY (quality-adjusted life year which measures the quality and quantity of life saved compared to its disease burden) is against the US Federal Law inclusive of the American Disabilities Act (ADA). Without a US definition of how to legally measure health outcomes compared to the therapy’s cost, it is a challenge to form a singular integrated fair price standard.


Looking ahead to what to expect in 2024 and the years to come, we turn to the IQVIA 2024 report. Throughout this document, consistent reference is made to the current financial pain threshold associated with drug costs. The report emphasizes a need to review the drug’s value compared to the health outcome it provides such as found on page 20 in which “Payers in developed markets are expected to face budget pressures and act to curb drug spending growth…” What will action look like? Perhaps flipping ahead to page 34 is foreshadowing Europe’s potential approach “It is possible that new brand growth will be lower while older established brands may grow more after they have demonstrated value in the market and negotiated market access...” While we agree this is definitely an area of uncertainty, it appears to be a valid path forward. Drugs must demonstrate value to stay in the market and the cost must be reasonable to which it can retain access.


Until cost effectiveness is a universal part of the US drug approval process, it will be up to the individual plans and patients to force cost effectiveness to be included in prescribing and formulary decisions. When faced with the counter argument that other developed countries lag in timely drug access, remember to focus on what matters. Other developed countries’ life expectancy, and arguably inclusive of their quality of life as well, are higher than those in the US - at a fraction of the cost.

 

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