NPC Comments on ICER Value Assessment Framework

October 13, 2015

Steven D. Pearson, MD, MSc, FRCP **
Institute for Clinical and Economic Review
One State Street, Suite 1050
Boston, MA 02109 USA

RE: ICER Value Assessment Framework

Submitted electronically via:

Dear Steve:

The National Pharmaceutical Council (NPC) shares your interest in making the health care system more effective and efficient, and in recognizing the many components of health care value. With this view in mind, we appreciate the opportunity to provide continued feedback on your value assessment framework, which is intended to inform coverage and treatment decisions made by payers in a more transparent and predictable way.

As you know, NPC is a health policy research organization dedicated to the advancement of good evidence and science, and to fostering an environment in the United States that supports medical innovation. NPC is supported by major U.S. research-based biopharmaceutical companies. We focus on research development, information dissemination, education and communication of the critical issues of evidence, innovation and the value of medicines for patients. Our research helps inform critical health care policy debates and supports the achievement of the best patient outcomes in the most efficient way possible.

Given NPC’s focus on evidence and research methods, it is incumbent upon us to share our concerns about the framework. To your credit, you have actively sought input from payers and the pharmaceutical industry in the development of this framework, and you have demonstrated a willingness to speak directly with a wide variety of organizations and consider their points of view.

Also to your credit, the general approach of your assessment process is mostly transparent and takes into consideration additional benefits beyond cost effectiveness, such as addressing an unmet need, a large disease burden, or a new mechanism of action that might benefit patients who do not respond to other available therapies.

However, the framework has some items that we believe should be addressed.

I.    Greater Transparency is Needed

Although the general components that are considered in the care value assessment are transparent, the actual economic models that are used to evaluate treatments—and the related data points—are not readily available for public review. We recommend making the models, data, assumptions and reasoning behind why they were chosen publicly available.

II.    “Health System Value Assessment” Should Be Renamed “Health System Budget Impact”

The health system value (HSV) assessment is an assessment of budget impact, not an assessment of value. Using the term “value” is misleading and suggests that the assessment represents the benefit of a treatment relative to its cost. In actuality, the assessment represents the short-term budget impact for payers and its label should reflect this.

III.    Methods for Assessing Health System Value Need Validation

The HSV assessment sets an annual threshold for the amount a drug could cost to keep overall health expenditures from increasing faster than the Gross Domestic Product (GDP) plus one percent. Methods to determine affordability price thresholds need broader input and validation from health care stakeholders.

IV.    Utilize More Realistic Adoption Rates

Under the HSV calculation, the framework relies on drug adoption rates that might not accurately reflect the uptake of a drug. Most payers tend to wait six to 12 months to see how a drug is being used and how well patients respond to it before making those types of calculations, which provides them with a more accurate adoption rate.

V.    Framework Disincentivizes Development of Treatments for Broad, Unmet Need Conditions

The method used to determine health system value creates a disincentive for the development of medicines to treat large, unmet burdens due to the ensuing budget impact. Because it is based upon the number of individuals requiring treatment, drugs that treat broad, unmet need conditions such as hepatitis C, inadequately controlled high cholesterol, or (potentially, in the near future) Alzheimer’s, would be viewed as having low health system value merely because of the large treatable population, even though they may be very cost effective for individual patients.

VI.    List Price Does Not Accurately Represent Actual Price

The HSV assessment also uses the list price of a drug, which does not consider the actual discounts and negotiations made with public and private payers. Prices – for both the comparator and active drug – should be representative of actual prices. While it may be difficult to precisely quantify the net price to payers, effort should be applied to calculate a weighted estimate of net price.

VII.    Allow for Approval Fluctuations

HSV calculations assume that similar numbers of new drugs will be approved each year by the Food and Drug Administration and will have similar market experience. From historical experience, these numbers can fluctuate greatly from year to year. 

VIII.    A Longer Time Horizon is Needed

Typically, payers only consider a 1-2 year timeframe for calculating budget impact, although the effects of some treatments are realized over a longer time horizon. The ICER health system value assessment uses five years for calculating the budget impact, although this still might not capture the true savings realized from curative therapies. Hepatitis C cures, for example, produce economic savings well beyond five years. Ideally, a lifetime horizon would be utilized.

IX.    Give Quantitative Credit for Contextual Considerations

The threshold prices do not reflect key economic benefits, such as improvements in worker productivity that are valued by employers, or the savings or reductions in caregiver burdens that are important to patients and their families. These considerations should be incorporated quantitatively, rather than merely qualitatively.

X.    Emphasize the Breadth of Policy Solutions

Despite an acknowledgment by most health care stakeholders that we need to have a broader, constructive discussion about value, too often these conversations devolve into criticisms of price. The breadth of policy solutions beyond price must be continually presented.

XI.    Bring Broader Stakeholder Representation into the Assessment Process

The current assessment process is predominantly driven by payers. The advisory board and voting panels should include broader stakeholder representation to reflect all relevant perspectives. Additionally, panel votes should be made publicly available to increase transparency.

Given these significant concerns, it is premature to use the framework for value assessments. Doing so could set a precedent that may be captured by the media and reduced to a single sound bite on price. The nuances of value and the breadth of policy solutions may be lost.

We look forward to our continued dialogue on the ICER value assessment framework, and thank you again for your willingness to consider and incorporate different views into the process.

Respectfully submitted,

Robert W. Dubois, MD, PhD
Chief Science Officer
National Pharmaceutical Council

** ICER President Dr. Steve Pearson responded to NPC’s letter in November 2015. You can read the response on ICER’s website.