In an ongoing war over drug prices, leading pharmacy benefit manager CVS Caremark is rolling out a new weapon that aims to limit drugmaker pricing power. The PBM plans to let clients exclude drugs based on assessments from a controversial pricing watchdog—and pharma is likely to hate the idea.
Under the program, unveiled in a drug pricing white paper, CVS Caremark will start allowing clients to exclude any drug with a quality-adjusted life years figure of more than $100,000, as determined by the Institute for Clinical and Economic Review. Health organizations use the metric to determine the cost of medicines in the context of quality and expected remaining years of life. Critics, however, have said payers can use the metric and other cost-effectiveness analyses to deny patient access to drugs.
The program will exclude drugs the FDA has deemed “breakthroughs.” In its white paper, CVS notes that the program “will focus on expensive, ‘me-too’ medications that are not cost effective, helping put pressure on manufacturers to reduce launch prices to a reasonable level.”
For ICER, which has had a contentious past with the pharmaceutical industry, the CVS program gives its work a “formalized role” in coverage decisions for the first time, Bernstein analyst Ronny Gal wrote in a Monday note. He wrote that if “others follow, key pricing power will shift from pharma to a pricing arbiter.”
Drugmakers likely won’t favor the program. ICER has routinely hit out at pharma’s pricing, and in turn, the drug industry has criticized ICER’s methodology and motives. A PhRMA representative said in an email that while the group "strongly supports the use of rigorous, objective evidence to guide formulary decision-making," it opposes "misuse of subjective, one-size-fits-all cost effectiveness thresholds to deny patient access to life saving treatment options."
"As many stakeholders have noted, blunt cost-effectiveness thresholds ignore what individual patient and providers value and conflict with the movement toward personalized, 21st century health care," she added.
In an email, ICER VP of communications David Whitrap said the organization is “encouraged” by the ways public and private payers are adopting its work, and that drugmakers are using ICER analyses to inform pricing decisions.
“The ideal result of any health benefit design is for patients to have access to all high-value treatments, and for pharmaceutical innovation to be fairly rewarded,” he said. “By using independent evaluations to link price more closely to the added clinical benefits a drug provides, drug makers and payers both can take action to accelerate the transition to a health system that achieves these goals.”
Aside from the ICER program, CVS is encouraging clients to move generic drugs to treat chronic diseases as well as insulins onto a list of drugs that patients can access with zero copays, according to the white paper. The company will also provide physicians with more information about drugs and costs so they might make decisions to save patients money.
The moves come as drug pricing continues to command attention around the U.S., and as the Trump administration works to implement its pricing “blueprint.” Recently, the Centers for Medicare and Medicaid Services announced a policy to allow Medicare Part B plans to implement step therapy for new patients and negotiate prices with drugmakers in an effort to control costs in that segment.
Editor's note: This story was updated with statements from ICER VP of communications David Whitrap and from PhRMA.