CVS Shifts to ICER Value-Based Drug Pricing Strategy

CVS Caremark will shift to using the Institute for Clinical and Economic Review’s (ICER) value-based drug pricing system, which excludes some high-cost drugs from health plans, a white paper from CVS explains.

Oftentimes, pharmacy benefit managers (PBM) receive backlash for the high drug prices currently facing the nation. Notably, when President Trump announced his new drug pricing policy in May, he was tough on the “middlemen” in the health care industry—singling out health insurance companies and PBMs specifically. President Trump blamed drug manufacturers, payers, and PBMs for causing high drug prices, claiming that they have become “very, very rich” at the expense of American taxpayers and patients.

“In 2017, drug price growth for PBM clients was only 0.2 percent, despite manufacturer price increases of nearly 10 percent,” CVS explained in its white paper. “Improvements in member adherence reduced overall health care costs for clients by $600 million. This clearly shows PBM tools are helping control costs while also promoting better health through greater adherence to medications.”

In an effort to continually combat these high drug prices, CVS has announced it will use ICER value-based pricing to determine drugs that the company will allow plans to exclude from coverage.

CVS will begin to incorporate ICER’s quality-adjusted life years (QALY) measure. This means that if a drug is priced greater than $100,000 per QALY at the time of launch, CVS will allow its clients to exclude the drug from their plan. According to the white paper, the QALY measure is commonly used in Europe where drug price effectiveness is measured at $50,000 per QALY.

CVS hopes that this program will allow PBMs to have more power in lowering drug prices by targeting their launch prices.

“The most important thing CVS Caremark can do for PBM clients is to help ensure people take their medications — doing so improves overall health and lowers cost,” the white paper detailed. “But to accomplish this, medications must be affordable. The techniques we have used to this point are based on evaluating the comparative effectiveness of various medications based on clinical evidence and using market techniques to ensure the lowest possible cost.”

“The proposed innovations build on that base of clinical evidence and health care economics to address two key aspects of the drug cost crisis: burdensome [out-of-pocket] payments and ever-higher drug launch prices.”

—Julie Gould

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