Sarah Emond (SE): ICER, the Institute for Clinical and Economic Review, was founded with the idea that the US system was making choices about price and access without a lot of transparency into how those decisions were made.
As a group that cares deeply about evidence-driving policy choices, we thought there was an opportunity to bring our independent lens to questions about price and access. This was motivated by the idea that a lot of patients are having trouble with the affordability of the US healthcare system. As an overarching goal, we believe that centering decisions about price and access around evidence will improve access and affordability for patients.
But what’s become apparent to us as we continue our work is how understanding how complicated our drug supply chain is also ends up being a really important piece of information as you think about driving change and about centering patient access in an affordable way using evidence as your guide.
Our work is internationally known as Health Technology Assessment (HTA). Its fundamental philosophical underpinning is that there are ways to judge how good the evidence is about a new drug—how it helps patients feel better or live longer—and how to scale the price to reflect that benefit. Our version is a little different than how it’s done in other countries. But at the end of the day, an independent assessment of that value should help drive affordable access for patients.
WG: The US is not an HTA market, but many readers live in such markets in Europe, Canada, or other countries. The US has been characterized by free pricing through negotiations between manufacturers, wholesalers, and myriad payers. What was the genesis of an independent body asking how to make sense of this system or, as you said, to help ensure that pricing is reflective of value and benefit?
SE: You are right: The US government does not have a centralized agency doing health technology assessment because as a US healthcare system, we don’t have one single payer, or even just a couple of payers. We have hundreds, if not thousands, of payers, depending on how you count, because a lot of us get our health insurance from employers and they’re making their own decisions about price and access and coverage.
It makes sense, to a certain extent, that we don’t have one government agency doing this compared to a country like the UK, which has a fixed budget and one National Health Service (NHS). They have a national agency (the National Institute for Health and Care Excellence [NICE]) that does health technology assessment to ensure that prices are scaled to the benefit that patients are receiving. To a certain extent, we are the perfect solution to our “hilariously American” healthcare system because we’re an independent nonprofit that no one has to listen to or do anything we say.
But we still have impact because there’s such a need in the system for this independent analysis. Because despite what some people would like to think, the US is not a free market for pricing drugs. Nothing from “Basic Economics” works here. There’s a government-granted monopoly, which creates a distortion to a free market in terms of supply and demand.
There are multiple actors participating in the price and access decision, none of whom are ultimately the one to actually benefit from the product: the patient. The doctors or the clinicians making the decision are not going to benefit from it. The ones paying for it, which is all of us through our health insurance premiums and our taxes, are not the ones benefiting from it. Then you get into conversations about population health and how we can have the most health for the most people with our resources.
There’s a lot that does not fit in the beautiful little supply curve that you learn in Basic Economics. That’s another reason we think that our approach—very public, multistakeholder, lots of drafts released for public comment—contributes to a conversation where all those different parties have something to rely on when they’re thinking about price negotiation and access decisions.
WG: ICER’s reviews can run the gamut of therapies from oncology and rare disease to chronic conditions that can touch larger populations. Would you explain your methods and approach to value and if/how population health actually fits into that rubric?
SE: We never forget this when we’re doing our work: When we overpay for value, if we’re paying too much for health gain, we are actually harming unseen people in our healthcare system.
We have data that show that when we overspend for a unit of health gain, health insurance premiums go up at such a rate that people become underinsured or uninsured. Some of them forgo care, and they experience harm up to and including death. That’s a dirty little secret of the American healthcare system that we don’t like to admit out loud, but it happens.
We use comparative clinical effectiveness first to analyze how much better this new drug is than what we already have. We use cost-effectiveness analysis second to ask how much gain we are getting and how much we are paying for that gain. The idea is to then scale how much we’re paying for the gain based on that opportunity cost, based on the approach of making sure we’re not harming other people in the healthcare system. We unapologetically take a population health perspective when we do that. That is the goal.
I know that people have questions about what we look at and a couple of things go into that. As an independent, philanthropically supported group, we can’t analyze every drug that gets approved by the FDA; it’s just a capacity issue. As we think about topic selection, we have a set of criteria and here are some of the things we consider:
- Is it a new mechanism of action that’s likely to transform the way a particular disease has been treated?
- Is it potentially the first treatment for a disease? This comes up a lot in rare diseases, of which we do a fair amount.
- Is it a treatment that has the potential to address health disparities? This was a driving motivation for us when we analyzed the sickle cell gene therapies a couple of years ago.
- Is it likely to have a huge budget impact? That’s why we’ve looked at GLP-1s—twice.
We have a set of criteria that help us know where the system is going to be looking for an independent assessment of value in order to make an evidence-based choice that will still center around affordability and access.
WG: As you said, the US has myriad fragmented payers. Historically, some of the Blue Cross associations have conducted health technology assessments. The previous administration passed the US Inflation Reduction Act (IRA), which seemed to nod in the direction that ICER-like methods would become more common. But where are we today? Who is paying attention to your work, and how is it being used?
SE: My favorite examples are when it’s used voluntarily between a drug maker and a payer or a pharmacy benefit manager (PBM), what I like to call the “voluntary de-escalation of the arms race.”
One of my favorite (and one of the first) examples is when Regeneron chose the ICER price for its atopic dermatitis product when it got approved. We try to time our reviews to come out right around the time of FDA approval. We had a great partnership with Regeneron. They gave us access to data which gave us the best chance of feeding it into the model to get an answer about what the fair price should be.
They very publicly said, “We’re picking the ICER price.” And then they said: “Payers, we think you need to do your part and make sure patients get access without a lot of utilization management and without a lot of cost sharing.”
And that’s what happened. We have a dozen or so examples of companies voluntarily choosing to price based on an independent assessment but then calling on the other side of the system to ensure access. This voluntary de-escalation is where we see some of our biggest impact.
But we also know that payers come in a lot of different shapes and sizes, so there’s a vertical integration. There are some very large health insurance companies and PBMs in this country, but there are also regional plans, there’s Medicaid (for low-income patients), there’s the Veterans Administration (the VA). By and large, those organizations (like us) don’t have big resources to do an independent assessment of value for every new drug that’s coming out.
More than half of Medicaid departments, about three-quarters of private payers, as well as the Veterans Administration, have been using our research to help center affordable access for years. We’re very proud of our partnership with the VA; they’ve even published about how it’s improved access and affordability for veterans by being able to use an ICER report in their negotiation with manufacturers.
WG: Are you able to look back and see that impact either in faster access (as you suggested), maybe less restrictive pre-authorizations, or alignment between manufacturer pricing and your assessment?
SE: Yes and no. The “yes” part: We have more recent examples of companies talking about the importance of using an independent assessment of value, or even doing their own value assessment, maybe making a few different tweaks or assumptions than we do, and sort of how that answer might change. When the manufacturer put out a press release around the pricing of Leqembi for Alzheimer’s disease, they talked about their cost-effectiveness math. It made my day that they talked about how they did it from a value perspective.
I would also give the example of Lenmeldy, a gene therapy for metachromatic leukodystrophy. The manufacturer has talked about how its pricing being in line with the ICER benchmark price has led to 98% payer coverage for patients. That’s the kind of win-win we want to see.
The reason I jokingly said “yes and no” is because our work is freely available and no one has to tell us how they’re using it, so there’s a lot happening in the ecosystem that we never have visibility into. And that’s okay.
There’s a lot going on with the information we’ve produced in order to center conversations about price and access on evidence. We get input from consultancies and others about how different actors are using our work. That feedback helps as we continue to tweak our methods and think about our topic selection, because we do not want to produce work for the sake of producing work; we want to produce work that is helping drive the system towards paying for value.
WG: QALY, or quality-adjusted life year, a component of your work, varies by country and is often treated as controversial. Recently, the UK raised its QALY limit in what seemed to be a response to cross-border negotiations around tariffs. How do you use that metric?
SE: One of the lessons we’ve recently learned is that the threat of tariffs is very motivating. But let’s demystify cost effectiveness a little bit.
Cost effectiveness is one tool to help us know what a fair price should be for a product in a healthcare system. We spend a lot of time at our public meetings talking about benefits beyond health: special ethical priorities, things that are sometimes hard to capture and to quantify but are terribly important as we think about comparative value.
For cost effectiveness to be effective, you need to be able to tie it to some sort of threshold. And if you’re going to tie it to a threshold, that means you need a common unit for health gain in order to compare across diseases. You can do disease-specific cost effectiveness. How much does it cost to use a GLP-1 to avoid one heart attack or stroke? You could do a cost effectiveness with that outcome. You could do cost effectiveness of a hepatitis C drug and ask: How much am I spending to avoid one liver transplant?
But then policymakers ask each other, how do I know if that number is good? How am I comparing that number to something? That’s where we have our opportunity-cost threshold, which says if we pay more than this for a unit of health gain, we’re harming other patients in the healthcare system.
That unit of health gain can be controversial. The Quality-Adjusted Life Year (QALY) was developed by American physicians and health economists 40 years ago. It has the potential of undervaluing treatments for patients with disabilities or other chronic conditions during the time in life extension, because of the way the math might work out.
Years ago, through conversations with the disability community and other patient advocates, we developed an alternative metric called the Equal Value of Life Years gained that doesn’t do that. That’s the primary metric that ICER uses and is the one we will use moving forward to make sure we’re not applying a metric that has the possibility of undervaluing those treatments.
This part can get misunderstood about cost effectiveness: In some countries, cost effectiveness is often used as the tool to say whether or not you can get access to that drug. That’s not how we imagine cost effectiveness being used in the US, because our system is very different from a single-payer, single healthcare system like the UK’s.
In our system, cost effectiveness helps us know: What’s the price that comes in below that opportunity cost threshold? Because one thing that we forget sometimes is that price is not immovable. It is a conscious choice that impacts cost across the entire health system. Payers, patients, and manufacturers all have to deal with the consequences of the price set by the manufacturer. There is a price that can be picked that comes in underneath that opportunity cost threshold. That’s the underpinning of how we think about the ICER fair price calculation.
WG: Some reviewers have explained their dilemma as: We may be extending life. But how does the life of a senior who is living with perhaps less impairment, versus a rare disease in a child where we may truly be extending life years with reduced disability, figure into your calculus?
SE: Cost effectiveness can help us scale it. That’s the beauty of using an independent approach. One of the special ethical priorities we talk about a lot in our public meetings is that, as a society, we value helping kids. This is a thing that we want to see investments in, spending money to help kids.
We saw this with Lenmeldy, and we saw this with the intravenous gene therapy for spinal muscular atrophy: Cost effectiveness also says that a therapy that can help a 2-year-old not die is worth a lot of money because of the number of years they have left to live.
Every senior that I’ve ever talked to about how they value medicines recognizes that they have fewer years to live. When they do their own calculation of what society should pay for a treatment for Alzheimer’s, they take that into consideration.
But here’s the other thing: Cost effectiveness says that you should be able to charge a lot more for a drug that’s really good, and that applies whether it’s a drug for a 2-year-old or for an 85-year-old. The math would show a pretty good price tag for a drug that cured Alzheimer’s disease because of its very significant impact on quality of life, and on caregivers.
Cost effectiveness also shows that a mediocre drug, whether it’s a drug for a 2-year-old or for an 85-year-old, does not command a very high price. And that’s where we think our work is helping: To incentivize the type of innovation that we all want for ourselves, for our children and our parents and our grandparents.
I want a cure for Alzheimer’s disease, and as part of society I will happily have society pay for that. Do we need to spend resources on the 20th drug for rheumatoid arthritis when we still don’t have a cure for Alzheimer’s? It’s a provocative question, but it’s meant to ask: What are we incentivizing through our system? Cost effectiveness is one tool that can help us know how much we would charge society for something truly transformative.