Payer Roundtable: ICER`s Increasing Influence—And Future Implications

The Institute for Clinical and Economic Review (ICER) recently announced that an advisory group will help it develop a report on drug price increases unsupported by clinical evidence. Additionally, CVS Caremark is planning to use ICER comparative effectiveness studies to determine formulary placement. Are these signs of ICER’s increasing sway in the marketplace? We asked a panel of experts to weigh in about ICER’s approach; best practices for stakeholders; and when and how it is appropriate to push back on ICER’s findings. Our panelists include: 

Melissa Andel, vice president of health policy, Applied Policy, Washington, DC;

Catherine Cooke, PharmD, research associate professor at the University of Maryland School of Pharmacy, Baltimore, MD;

Charles Karnack, PharmD, BCNSP, assistant professor of clinical pharmacy, Duquesne University, Pittsburgh, PA;

Gary Owens, MD, president of Gary Owens Associates, Ocean View, DE;

David Marcus, director of employee benefits, National Railway Labor Conference, Washington, DC;

Arthur Shinn, PharmD, president, Managed Pharmacy Consultants, Lake Worth, FL;

Daniel Sontupe, executive vice president and director market access & payer marketing, The Bloc Value Builders, New York, NY;

Norm Smith, principle payer market research consultant, Philadelphia, PA;

Barney Spivack, MD, national medical director of Medicare case & condition management at OptumHealth, New York, NY; and

F Randy Vogenberg, PhD, RPh, principal, Institute for Integrated Healthcare, Greenville, SC.

ICER’s report on drug price increases is due out in early 2019. Is ICER gaining more influence in the face of rising drug prices and public’s heightened concern about those increases? 

Dr Karnack: Yes. Most consumers believe drug prices are out of control, and many practitioners do not think the clinical evidence supports most of the increases. 

Dr Owens: There is definitely increased awareness that drug prices continue to rise despite promises to limit those increases. Often, they are not linked to a new clinical benefit. Systematic analysis will help put pressure on manufacturers to eliminate these kinds of increases.

Mr Sontupe: I am a strong believer that ICER should be taken more seriously. As a cross-functional group, they represent the middle ground between pharma and payer. This gray space has been very difficult to navigate and is full of negativity and blame. 

Dr Shinn: I agree that ICER should be taken very seriously. CVS Caremark’s decision to begin using ICER’s data when putting together its formularies is a sign of the times. Express Scripts has worked with ICER in the past, as well. 

Ms Andel: ICER is already taken seriously. Today, manufacturers think about how ICER will review a product before the product launches. Whether they agree with the approach the organization takes or not, they are definitely concerned about the impact a negative review will have on a product’s potential.

Mr Marcus: I agree. The drug industry’s reaction to prior ICER drug assessments proves this. 

Dr Vogenberg: I appear to be in the minority on this point. I think ICER is one of many available resources that is tainted by old thinking around value. 

Can you elaborate? 

Dr Vogenberg: I see ICER as a new trap on the old way of working with third-party payers that themselves add no value to health care for patients. Pricing needs to change and move to a net cost model that allows supply chain to demonstrate their value for payment above the cost of drug—not price of drug.

Mr Smith: I would ask, who pays for the people in ICER? In the beginning, both insurers and manufacturers were involved; I wonder if that’s changed?

Dr Shinn: You bring up a valid point. Some believe that ICER is close to the insurance industry. Its advisory board includes payers, as well as pharma companies and pharmacy benefit managers (PBMs). I don’t necessarily see this as a negative, but—as with any nonprofit—it’s fair to follow the dollars to see where the funding comes from (see accompanying Sidebar for more). 

Do you think ICER will make an actual difference on right-pricing medications? 

Dr Owens: This is a more difficult question. We operate in a free enterprise system; unless drug pricing gets regulated at the state or federal level, there is little incentive to lower or even minimize price increases. As long as medications are necessary and as long as a third party must pay for them, it can remain open season to increase prices.

Mr Sontupe: Right-pricing is a tricky term that means different things to different stakeholders. The pharma company must remain profitable to stay in business, so the right price for it is the one that provides the greatest profit, while still providing the most value to the consumer. ICER can help guide that price. However, the cost of discovery, marketing, manufacturing also needs to be considered, as well as a need to make profit to help drive the broader economy.

Dr Karnack: I am cautiously optimistic that ICER can make a difference, given that there is a cross section of manufactures, payers, and PBMs involved. 

Mr Marcus: ICER may help. Manufacturers that see demand decline following an ICER determination that a drug is overpriced may have no choice but to lower the list price.

Dr Vogenberg: ICER may have an impact in the short term in select conditions, but not over the long term, meaning after 2020. 

Dr Spivack: For me, it’s all about medications whose prices cannot be justified by evidence. CVS Caremark’s recent announcement revolves around incorporating ICER comparative effectiveness studies in the review of nonbreakthrough meds. It is meant to impact formulary placement. 

Dr Cooke: I agree—the relationship is a function of the comparative effectiveness of the product. ICER may likely have less market influence with products that offer substantial benefit. 

Mr Smith: Right pricing is in the eye of the beholder. Cost-effectiveness is not everything—it’s a useful term for managing populations. Individuals may want to look at cost-benefit: “I don’t care if it is not cost-effective overall. If I need a therapy and I’m willing to pay for it, maybe I’ve earned it.” The problem comes when a patient should get a specific therapy, but can’t pay for it.

I imagine that some believe that such instances of unaffordability—which appear to be on the rise—justify the so-called “public shaming” of drug companies. FDA has used this approach with manufactures who appear to be blocking attempts of generic drug developers to compete. Now comes ICER’s impending report. 

Dr Karnack: Shaming is often used in consumer advocacy, and it can get results. Look at the cases involving Volkswagen’s emissions scandal and malfunctioning Takata airbags.

Dr Vogenberg: There is a lot of shame to go around—this is just another type of shaming that is becoming more common. But the key is to act on systemic inequities. We need to get to root causes that will make a difference.

Ms Andel: I have mixed feelings about the role of public shaming. It is a powerful tool, but I question whether it is the correct one to use. Certainly, bringing attention to the more questionable tactics used by some manufacturers has been good, but we need to think about how we can address the problems that encourage these tactics, not just try to embarrass the company that last took a headline-grabbing price increase. 

Mr Smith: There is another name for shaming: jawboning. It may be more effective in the Trump era. Imagine how [Gilead Sciences’ hepatitis C medication] Sovaldi (sofosbuvir) might have fared with Trump tweeting against it? As long as the response to shaming is not discounting off of the net price, I am ok with it. 

Mr Marcus: The lack of price transparency in the pharmaceutical industry is a problem. Political pressure has not worked, so perhaps public pressure derived from ICER’s report will be more successful. Even if you believe that ICER’s value-based methodology contains flaws, increasing public awareness of a drug’s price components can be tremendously beneficial.

Dr Owens: Shaming alone will not stop the upward spiral of drug prices, in my opinion.

Ms Andel: It seems as if public shaming frequently leads to decisions that may offer short-term solutions—such as a lower price—at the expense of longer-term payoffs.

Mr Sontupe: In ICER’s case I don’t see it as shaming. It is using a cross-functional group that includes pharma. It is important that they take a transparent view into the value and outcomes driven by products, as well as the need for pharma to generate a profit. The ICER approach will hopefully put an end to the usurious practice of overpricing older drugs and those with limited value simply because they have exclusivity. It enables drugs that do the most good to make the profit they deserve.

So, is stakeholder cooperation with ICER pretty much inevitable?

Ms Andel: I think that we are headed in that general direction. Drug prices—just like other aspects of health care—are expensive. At the same time, though, innovations in drug research have led to incredible clinical breakthroughs. We can keep our heads in the sand all we want, but at some point, we will have to reckon with this, because it isn’t sustainable. I hope that stakeholders will be able to work together to agree on a way to evaluate new products and establish a fair market value. Manufacturers are better off if they have a seat at the table when some of those decisions are being made.

Dr Owens: When ICER has released its reports in the past, the response of manufacturers has been to vigorously disagree and attempt to show the flaws in the analysis. Unless ICER reaches a point where it has regulatory support, I don’t think there will be voluntary agreement with its analyses.

Dr Vogenberg: Manufacturers are caught in the middle of a current system that needs change and a new system with yet-to-be-determined measurable drivers.

Mr Marcus: The pharmaceutical industry is driven by profit, so if the ICER reports begin to hurt the bottom line, I expect we will see increased cooperation. During the review process, it would be in the best interest of manufacturers and other stakeholders to produce evidence regarding the value of a drug.

Mr Sontupe: Manufacturers don’t want ICER looking only at the drug’s value. By providing input, you potentially avoid the downward impact of generating less profit, which leads to job and cost cuts, less investment in lifesaving treatments, and more spending in cash-paying cosmetic areas. 

Dr Spivack: There is increased awareness among professionals, policymakers, the public, insurers, and the pharma industry that unjustifiable price increases need to be justified with high-quality evidence when available. Having pharma and other industry representatives at the table may strengthen ICER’s recommendations and perceived role, as well as lead to more trust of the pharma industry.

Dr Karnack: Cooperation is in their best interest. Manufacturers do not want price controls, nor importation of drugs from other countries. 

Mr Smith: Both ICER and manufacturers need to trust one another. Pharma needs to be sure that ICER’s methodology is objective and its assumptions fair.

Dr Shinn: Pharmaceutical companies have to work with ICER. Their role should be very straightforward: give ICER the data and review what ICER came up with as a result of analyzing that data. If ICER’s recommendations put the drug company at a disadvantage, it is incumbent upon that company to prove their case or, if they can’t, accept the results. 

Dr Cooke: Look at ICER’s work involving PCSK9 inhibitors. The initial prices were unaffordable for most Americans, and clinicians felt the amounts were unjustified. ICER helped quantify those sentiments about value, and Regeneron and Sanofi ultimately lowered the price.

Ms Andel: If a manufacturer cannot provide clinical or economic data to refute a value analysis, then a compromise on price makes sense. Some coverage is better than no coverage. Payers ultimately have the upper hand against manufacturers.

Dr Owens: Agreed. Did [the PCSK9 inhibitor makers] really give in because of ICER, or did payers cause it to happen? Insurers were so outraged by the price that they used those numbers to project just how unsustainable the model was. They also reacted with very rigid—sometimes too rigid—prior authorization programs, which impacted utilization. Ultimately, manufacturers had to come to the table and lower the price in order to get payers to relax their management activities.

Mr Marcus: ICER’s report may have been the catalyst, but it was not the only reason PCSK9 inhibitor prices were lowered. Clinicians simply would not prescribe a drug that offered no additional value to patients. With demand already low, it made sense that manufacturers lower their prices in response. 

Mr Sontupe: The pricing strategy was bad from the beginning. It is important for pharma to understand how to price a product, based on value and opportunity to maximize market share. The new hepatitis C drugs were priced right because they changed the market and saved money in the long run. But the PCSK9 inhibitors have limited value vs statins, which have been tried and true for 30 years—plus they are cheaper. 

Mr Smith: In addition to having a good pricing strategy, drugmakers need to perform the right studies. [The manufacturers of] PCSK9 inhibitors did not study the right population before launch. Once they saw the mortality data, they correctly changed course, focusing on those members who would benefit significantly. That’s the right way to market a drug in today’s environment.

Speaking of the right way to do things, how should manufacturers go about contesting ICER’s recommendations if they disagree with them? 

Mr Smith: Stress test your final price with health economics experts and experienced managed health care professionals before announcing it to the market. Be sure you have a defensible value proposition before launch.

Ms Andel: If manufacturers have data showing that patients especially, and providers to a lesser extent, place value on something, then they should share that with payers. Maybe a payer does not think the value add is worth the increase in premiums that would result. But perhaps patients would be okay with the increase.

Dr Owens: If there is truly a flaw in ICER’s analysis, then the manufacturer should show the flaws and request a reassessment.

Mr Marcus: Yes, push back against unfavorable reports when you have evidence that the value of a drug exceeds ICER’s determination. Pharma will pick its battles and do just that when it has evidence that the drug in question carries more value. Ideally, this will be done during the ICER review process so that the dispute does not become public after ICER issues a report. 

Dr Owens: It may be a good idea for manufacturers to engage ICER in a pricing/value analysis before releasing the drug price. Having the ICER “seal” on a price before announcing it to the public could go a long way. But that requires a shift in current pricing practices, which often seem to be based more on what the market will bear than on what value the agent brings to the market.

Dr Karnack: For me it comes down to ethics and avoiding the “whatever the market will bear” mentality, which is perceived as gouging the public.

What else should pharmaceutical companies be doing?

Dr Karnack: They should perform unbiased, relevant studies showing therapeutic advancement, rather than playing up results of “me-too” studies that demonstrate noninferiority. Minimize manufacturer financial support of trials. Show the actual experimental data, not enhanced or extrapolated data buried in nonparametric statistics that are difficult to interpret. 

Mr Smith: Don’t try to fool the folks at ICER. I’m sure their warning systems are sensitive to that. Limit those in your organization who interact with ICER. Be sure they are well-trained health economics experts with great presentations skills. Have them practice a lot, and be sure what they say is subjected to thorough medical-legal review. Consider engaging with an outside health economics expert to show how your presenters would face ICER. 

Ms Andel: Look at products as an outsider would. Internal teams work on therapies for years, which can lead to blind spots and tunnel vision. Get other stakeholder views. There are plenty of examples where what seems intuitive does not necessarily happen in the real world. Manufacturers can overestimate the impact that different dosing or routes of administration can have on compliance and, ultimately, outcomes.

Mr Sontupe: When working with ICER: transparency, transparency, transparency. It’s that simple.

Dr Shinn: Agreed. I have been on conference calls with clients where ICER officials have presented their findings. They are very receptive and open to input. 

Dr Vogenberg: Taking a step back, manufacturers should embrace transformation around price and elimination of the current [PBM] system that drives up the cost of drugs. They need to drive simplification in the supply chain and determine value from the patient and purchaser perspectives.

What about payers—what should they be doing? 

Mr. Smith: Make sure that ICER’s assumptions match your membership. Make sure the person on your P&T committee who reviews ICER’s reports has substantial health economics experience. Finally, be aware of potential threats to ICER’s hold. ICER has not yet faced legal challenges from consumers, but it is not inconceivable that someone who loses his or her partner “because ICER didn’t like the therapy that my spouse needed” might sue, and a jury might sympathize.

Mr Marcus: Review ICER reports as they are released. Question PBMs when a report shows that a formulary drug is overpriced. PBMs, in turn, should pressure manufacturers to react in such instances.

Mr Sontupe: Drive patient engagement, rather than worrying about an extra $.05/per member per month.

Dr Owens: Take a more active role in supporting ICER as it evolves. With payer support, ICER may gain more official status as the agency that tries to balance the cost/value equation for new and existing treatments. Recently, CVS/Caremark announced that it would give self-funded clients the ability to decide not to cover new drugs with a cost/QALY [quality adjusted life year] over $100,000. Perhaps this is the type of support that payers need to put behind ICER.

Dr Spivack: Exactly. The United States has not wanted to grapple with the concept of allocating limited health care resources, but we need to become familiar with this reality.

Ms Andel: Public shaming tactics can be—and have been—used against payers. So, be upfront and honest with providers and patients. If you do not think a new product is clinically superior, or represents good value, then why not?

I think it is also important to remember that prescription drugs are but one piece of the health care system and make up a relatively small portion of overall spending. Addressing imbalances in the drug pricing market is one thing that needs to be done, but it’s not the only thing.

Dr Cooke: In the end, even though affordability of medications is at the forefront of public concern, that is only one part of the equation. Affordability does not address the value you get for what you pay. It’s like buying a toy at a dollar store. When it doesn’t work, your child knows that was a wasted dollar. There’s no value, even though it was affordable.