Life Science Compliance Update

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November 21, 2017

ICER Expanding Probe

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A nonprofit group, the Institute for Clinical and Economic Review (ICER), recently received a three-year $13.9 million grant from the Laura and John Arnold Foundation to expand its ongoing investigative scope on drug pricing to include all new medicines and price increases on existing treatments.

Up until now, ICER hasn’t had the resources to review all new medicines. The additional funding “puts us on a new trajectory,” according to Steven D. Pearson, president of ICER. “Now we’re going to be able to cover the landscape.”

ICER was essentially founded with a $5.3 million grant from the Arnold Foundation in 2015 and since then has published a series of reviews of new prescription drugs that treat conditions ranging from high cholesterol to congestive heart failure. While companies have typically agreed to participate in the reviews, ICER has found in most cases that the drugs have been priced above what it has deemed a fair value range.

Going forward, Pearson said, ICER will try to begin its reviews about 7½ months before the date the Food and Drug Administration (FDA) is anticipated to rule on a drug candidate. The reviews would be made public around the time a company sets the price of a newly approved medicine and health insurers decide whether to cover it.

While drug companies aren’t bound by the reviews, insurers and consumer groups are increasingly citing ICER’s “value frameworks” in negotiating how much they will pay.

According to Pearson, ICER staff also will begin examining the rationale drug companies use in determining whether to raise the price of drugs already on the market. Drug makers will be invited to take part in the review process.

ICER has previously issued reports outlining what it believes to be an appropriate cost for new medicines to treat high cholesterol, lung cancer, hepatitis C and other conditions, typically suggesting a value to patients that is a fraction of prices set by drug makers.

Rather than working from list prices as it did initially, ICER now attempts to “come up with a more precise estimate incorporating average net prices, taking rebates into account, to determine what it considers fair value-based pricing,” Pearson said.

Pharmacy benefit managers, insurers and government agencies have all used ICER reports in negotiating pricing and preferred formulary placements with manufacturers, ICER President Steven Pearson said in an interview, mentioning Express Scripts, CVS Health, the U.S. Department of Veterans Affairs and others.

Pearson said he had been informed by Express Scripts that it used ICER’s report in aggressively negotiating discounts on prices for new curative hepatitis C drugs with Gilead Sciences. “Veterans Affairs have used our reports to inform their thinking and price negotiations,” Pearson added.

The new funding comes at a time of increased scrutiny among politicians and insurers over the high cost of new prescription medicines in the United States, especially in comparison with other countries, and steep price hikes of some older generic medicines faced with little competition.

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