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Tag: ICER

  • President-elect Biden proposes German model for drug pricing

    President-elect Biden proposes German model for drug pricing

    President-elect Joe Biden is proposing that the US look to Germany as a model for drug pricing. On one hand, a German model could be a step forward, putting in place a national system for evaluating and pricing drugs. But, the devil is in the details; how will they compare with President Trump’s latest interim-final drug pricing rule for Medicare.

    Germany, like many other countries, has a government-run system for determining the value of a drug and pricing the drug. The US has no such system at the moment. Our federal government does nothing to assess the value of drugs it approves or to rein in drug prices.

    Biden’s proposal would establish a government team charged with determining a drug’s fair value. It could work much like the non-profit Institute for Clinical and Economic Review. That group has taken on a significant amount of work evaluating the cost-effectiveness of drugs.

    Biden also proposes that, as in Germany, pharmaceutical companies would be required to negotiate drug prices, in collaboration, at the national level, that would apply to both public and private insurance.

    It’s not clear what pricing elements a Biden administration would factor into the determination of a drug’s price. Everything turns on how much weight the group gave to various pricing elements. Under Biden’s proposal, if a “quality-adjusted life year” or QALY was worth as much as $150,000, much higher than in Europe, drug prices likely would not come down much. And, tens of millions of Americans would continue to be forced to forego needed medicines.

    The international reference pricing bill, which passed in the House of Representatives, HR3, gives significant weight to the price paid by other wealthy nations, which makes tremendous sense. Why should we be paying more than the Germans and the Japanese for our drugs?

    HR3 would bring down the price of 350 drugs significantly. But, it is going nowhere in the Senate. That said, the Trump administration has issued an interim final rule that would set Medicare drug prices at a level comparable to what other wealthy countries pay. President-elect Biden might intend to undo Trump’s rule, even though it would drive down prices considerably and eat deeply into pharmaceutical company profits.

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  • Small non-profit helps lower price of some ineffective drugs

    Small non-profit helps lower price of some ineffective drugs

    Caroline Humer reports for Reuters on the value of the Institute for Clinical and Economic Review (ICER) in holding drug prices down. ICER is a small not-for-profit research organization that determines the value of particular drugs and what they should cost. ICER has been effective at helping to lower the price of some prescription drugs.

    Most other wealthy countries partner with independent research organizations like ICER to set prices for virtually all prescription drugs. The US government does not have its own agency or a partnership with an independent agency that determines the value of drugs. In this research vacuum, ICER has developed influence.

    For example, some people thought that Gilead could charge as much as $10,000 for remdesivir because it was found to be helpful in treating COVID-19 patients. But ICER said that the drug did not justify a price of more than $5,000. Gilead ended up charging $5,700 for a ten-day supply.

    ICER’s budget is not large enough to establish the value of all drugs or even most drugs. But, some say it has helped reduce the cost of almost 100 drugs. And, some health insurers keep off of their formularies certain drugs that ICER deems do not offer good value.

    Drugs that ICER has determined cost way too much and are not cost-effective include Aubagio, for the treatment of multiple sclerosis, Ninlaro, for the treatment of multiple myeloma, Austedo, for the treatment of Huntington’s disease, and Rebif, an anti-inflammatory for the treatment of multiple sclerosis.

    Not surprisingly, the pharmaceutical industry is not accepting ICER’s influence, which is reducing its profits. It is attacking the non-profit any way it can. Often, it relies on non-profits that are funded by pharmaceutical companies to attack ICER.

    ICER’s goal is simply to help insurers and other prescription drug purchasers choose drugs that are cost-effective for a given condition, assessing the drug’s price and benefit to quality of life. To establish the fair value of a drug, it relies on a time-tested formula, QALY or quality-adjusted life year, what it costs to extend someone’s life with one year of good health. That is what other countries’ health systems do.

    The federal government does not negotiate drug prices for Medicare or Medicaid. In fact, Congress forbade the federal government from using QALY to negotiate drug prices. ICER has been taking on that role, in a way.

    Unfortunately, the pharmaceutical industry holds so much sway over pharmacies and other health care providers that CVS Health Corp was not successful at keeping drugs, which ICER has determined are not cost effective, off its formulary for employers.

    ICER plans to look at prices for the novel coronavirus vaccine and COVID- 19 treatments with the goal of helping to ensure they are fair.

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