CVS decides to make Icer an American Nice

Biopharma might be getting the pricing controls that it tried to stop.

Vantage views

The US cost-effectiveness body Icer has become everything its foes warned it would be: a de facto arbiter of which drugs are too expensive that is not technically accountable to the public. And the biopharma sector has only itself to blame.

Pharma has historically fought every government attempt to review and limit the cost of new therapies, but amid spiralling drug prices Icer has emerged as an influential voice – and it received another endorsement this week from the pharmacy benefit manager CVS. As Icer is funded primarily by non-profit foundations it is insulated from the political pressure that could be applied to a government agency. The sector might end up wishing it had something more like Nice in the UK or Iqwig in Germany, or perhaps that it had been better at regulating drug costs.

$100,000 bar

CVS yesterday announced a plan to allow its clients, typically self-insured employer health plans, to exclude any drug that exceeds Icer's value-based threshold of $100,000 per quality adjusted life year (Qaly). At the list price, numerous drugs have had a price higher than that, although some recent launches that were widely expected to be expensive have come in at a lower price. 

And since rebating means that nobody in healthcare knows the real price of a drug it is hard to say, for example, whether expensive therapies like Vertex’s Kalydeco and Symdeko – which came in at more than $1m per Qaly in some scenarios – actually meet the CVS benchmark (Vertex and orphan drugs test limits of US payers, March 28, 2018).

A cynic might say CVS has simply shifted the blame for exclusions to payers in an attempt to rehabilitate its reputation, especially as pharma has been effective in recent months in portraying PBMs as the villains in the drug pricing drama.

But CVS’s announcement also reveals the growing role Icer has on reining in healthcare costs – one to which even some biopharma groups have acquiesced, such as when Regeneron and Sanofi worked with Icer on Praluent’s cost-effectiveness ahead of the release of the Odyssey Outcomes trial earlier this year (ACC – Praluent’s Odyssey ends with a whimper, March 10, 2018).

Who do you answer to?

Still, not all of biopharma has been happy about Icer's growing influence. As Icer is a private organisation, one argument put forward by industry is that it will be most responsive to the agendas of its main funding foundations, rather than the public.

This is not in evidence. After all, Icer's processes are transparent and open to public comment, and pharma company executives sit on its advisory board. Still, there is no accountability quite like that of an election, and unlike its UK and German counterparts the US body operates at a distance from public opinion, meaning that it can make judgements without fear of political reprisals. 

But, for all the posturing over drug prices, the US government is hands-off when it comes to making purely economic evaluations on health technology. This is the result of a long campaign by physicians, pharma companies and other interest groups to browbeat any agency that tried.

The Congressional Office of Technology Assessment, which evaluated bone marrow transplants in 1981 and erythropoietin-stimulating agents in 1990, was defunded in 1995 by a new Republican majority; the Agency for Healthcare Research and Quality was pushed out of developing medical practice guidelines by the same congressional Republicans after a lobbying campaign by surgeons angered by its conclusion that there was little evidence backing surgery as a first-line treatment for low back pain.

Regardless of any government evaluations – or lack of – payers were forced to make decisions, based on their own data, on what drugs and procedures to pay for. And in the context of growing expenditures – healthcare costs are projected to equal a fifth of US GDP by 2025 – something like Icer seems, in retrospect, an inevitability.

Perhaps if pharma had been self-regulating on prices, or had been more transparent about the benefits of its products, Icer would not have been necessary. But its growing influence has shown a clear need for a US pricing watchdog, despite the sector's success at stopping government intervention. It looks like pricing controls are coming, whether biopharma likes it or not.

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