Study Finds ICER’s Shared Saving Methods Reduce Incentives for Rare, Severe, and Pediatric Disease Treatment Innovation
New research published in Value in Health in collaboration with the National Pharmaceutical Council confirms the use of “shared saving” methods will diminish innovation incentives in areas of high unmet need.
For Immediate Release: November 7, 2024
Contact: Michael Pratt, 202-827-2088, mpratt@npcnow.org
Washington, D.C. – A new study published in Value in Health assessed the potential impact of the shared savings methods developed by the Institute for Clinical and Economic Research (ICER) on the value of a hypothetical cure for various diseases, finding that rare, severe, and pediatric diseases face the highest level of “value-based price” reduction.
In 2023, ICER updated its Value Assessment Framework to incorporate "shared savings” methods, which it describes as the “sharing” of health system savings when valuing treatments that generate substantial cost offsets and specifically targeted "high-impact single and short-term therapies." This controversial update has been criticized as being not evidence-based, lacking methodological rigor, and “operating in a false reality that does not reflect today’s marketplace.”
Adding to these concerns, the findings of this study indicate that ICER's shared savings assumptions have an adverse effect on recommended prices for treatments aimed at rare, severe, and pediatric diseases, which could lead to diminished incentives for innovation within these critical disease areas.
ICER has expanded its use of “shared savings” from its evaluation of curative one-time therapies to now considering this shared savings evaluation for any drug where a large percentage of the value-based price comes from cost offsets of the comparator therapy and where the comparator therapy price is not known to meet common cost-effectiveness thresholds. The inclusion of therapies for rare, severe, and pediatric diseases under this framework poses a significant threat to innovation and allows for the arbitrary capping of these therapies' prices, regardless of the evidence of their value to patients and society.
Related Reading:
- AJMC: Recommendations for ICER
- "ICER’s self-created shared savings approach is not evidence-based, lacks methodologic rigor, and operates in a false reality that does not reflect today’s marketplace.” - Kimberly Westrich
The study analyzed the 260 therapies approved by the FDA for 89 unique diseases between 2019 and 2023 and measured the differences in cost-savings using one of ICER’s shared savings methods (the 50/50 method and the $150,000 cap method) versus without a shared savings method and determined that:
- Therapies for diseases with high societal burdens would be most impacted by ICER’s shared saving assumption, especially rare, severe, and pediatric diseases.
- Diseases with higher cost burdens, shorter life expectancies, poorer quality of life, and lower prevalence were more likely to be adversely affected by ICER's shared savings assumptions.
- Excluding indirect medical costs, these diseases include hemophilia A, acute hepatic porphyria (AHP), and Paroxysmal nocturnal hemoglobinuria. Including indirect medical costs, these affected diseases include AHP, spinal muscular atrophy, and active anti-neutrophil cytoplasmic autoantibody-associated vasculitis.
“ICER's shared savings approach risks stifling innovation for our most vulnerable patients. By disproportionately impacting treatments for rare, severe, and pediatric diseases, we are potentially limiting the very cures that society values most. We must ensure that health economics frameworks prioritize and reward advances in these critical areas,” said Jon Campbell, NPC Chief Science Officer.
While society and medical experts tend to prioritize treatment for severe, rare, and pediatric diseases, ICER’s shared savings assumptions take the opposite approach of new, alternative approaches like the generalized risk-adjusted cost-effectiveness (GRACE) approach and the National Institute of Health and Care Excellence's (NICE) “value modifier.”
The findings of this study underscore the urgent need for a reassessment of ICER's shared savings assumptions. By jeopardizing innovation and limiting patient access to life-changing treatments for rare, severe, and pediatric diseases, this value assessment method fails to appreciate the real-world cost offsets of new treatments and poses substantial harm and unexpected costs to patients.
About the National Pharmaceutical Council
The National Pharmaceutical Council (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. Founded in 1953 and supported by the nation's major research-based pharmaceutical companies, NPC focuses on research development, information dissemination and education on the critical issues of evidence, innovation, and the value of medicines for patients. For more information, visit www.npcnow.org and follow NPC on LinkedIn.