The concept of drug-pricing is quite the hot topic these days. Both emotion and politics can stand in the way of an objective look at drug-pricing and prevent collaboration to find solutions.
At the annual meeting of the AANEM earlier in October, Steven Pearson, MD, founder of the Institute for Clinical and Economic Review (ICER) addressed the ongoing issue of drug-pricing. One of the tasks ICER has undertaken is using cost-effectiveness analysis to determine value-based price benchmarks.
As Pearson explains, any pricing model must be designed to achieve the goal of sustainable access to high-value care for all patients. Long-term value and short-term affordability are required to achieve this goal.
The four questions illustrated in this video help ICER evaluate long- and short-term value:
- How well does the drug work?
- How much better is the drug than what’s already available?
- How much will it save us?
- How much would it cost to treat everyone who needs it?
ICER is able to use this information to assign a value that determines the cost of the drug per quality-adjusted life year, or QALY. An acceptable number is $100,000–$150,000 per QALY. If a drug offers increased QALYs, the cost can increase correspondingly and the drug will still be cost-effective.
Using this framework, ICER has been able to recommend price changes to certain drugs.
For example, ICER recommends an 85–90 percent discount on drugs in the tardive dyskinesia category to meet this cost-per-QALY threshold. CAR-T for cancer is priced just about right. And emicizumab for hemophilia A is actually cost-saving.
This approach is being used in a variety of settings. The VA is using ICER reports to negotiate prices. Drug makers use it to justify pricing in the marketplace. Medicaid programs and private payers also use the ICER assessments.
This doesn’t settle the issue on pricing, however. Even if a drug meets the cost-effectiveness threshold, the burden on the system to provide the medication for everyone affected may be too high. There are other unique challenges as well, some that are of particular importance valuing a new neuromuscular treatment.
For example, there may be substantial uncertainty regarding the effectiveness of a drug because of size and duration of clinical trials often seen with rare neuromuscular disorders.
Additional value elements may be important but not part of standard cost-effectiveness:
- Does it offer a novel mechanism of action?
- Will it have a significant impact outside the family, including schools and communities?
- Will it have a significant impact on the entire infrastructure of care?
- What about social value in very severe conditions, those that affect children, or are rapidly fatal? Or what about cures for diseases with extremely high current cost of treatment?
So the ICER pricing model offers one measuring stick for cost-effectiveness, but it is only a starting point, particularly in the world of neuromuscular disorders.
With many potential cures in the pharmaceutical pipeline, including for muscular dystrophy, these factors must be wrestled with. Specialty societies must demand to be heard by the insurance industry so patients are able to receive the best possible care when it is available. In the end, it is the specialist who knows the impact of failed pricing and insurance policies better than most.