ICER's blasted pharma pricing for years, but now drugmakers are 'rolling up their sleeves' to cooperate

Sanofi and Regeneron's next-gen cholesterol drug Praluent never lived up to early expectations, and its price tag was at least partly to blame. The cost petrified payers. Even before it—and its fellow PSCK9 med from Amgen—won FDA approval in 2015, pharmacy benefit managers (PBMs) rang alarms about the hundreds of billions the new PCSK9 class could cost the healthcare system.

But payers themselves weren't the only ones calling out costs after the drugs launched with stickers of more than $14,000. Self-appointed cost watchdog the Institute for Clinical and Economic Review (ICER) had just started assessing new drugs, and it said the companies would need to cut their prices by two-thirds to be cost-effective. 

Sanofi and Regeneron hit back. ICER had underestimated the cardiovascular risks patients faced, the partners said, and that in itself undercut Praluent's value. The group's process wasn't transparent, its estimate of the PCSK9 class' overall costs was "unrealistic" and its report ignored the "value and risk of innovation," they argued. Amgen tossed out its own litany of complaints.

It was only the beginning in that tug of war. Of 72 treatments assessed since ICER started a cost-effectiveness review program, the group has supported pricing on just 21, according to a chart compiled by Bernstein analysts in July. Since then, ICER has published reports endorsing pricing on two out of seven drugs, for a total of 23 endorsements in 79 reviews. It's still waiting on pricing decisions for three drugs, so the approval figure could climb. 

Drugmakers publicly balked at their products' verdicts dozens of times. Pharma advocates accused the group of shilling for the insurance industry—and PBMs, which sometimes praised ICER's work, didn't do much to dispel that idea.

But a funny thing happened: Signs of cooperation emerged. ICER not only revamped its appraisals to take pharma's concerns into account; some drugmakers themselves reached out. And some of the initial nos have since turned to yeses, including Praluent to treat high-risk high cholesterol patients.

Later, Sanofi and Regeneron would in fact approach ICER about pricing before launching their soon-to-be blockbuster immunology drug Dupixent. Indeed, over the last two years, many companies have been "rolling up their sleeves" to participate in the group's drug value reviews, said David Whitrap, ICER's vice president of communications and outreach.

ICER still has its critics, of course. But like it or not, with drug pricing a top issue going into the 2020 elections, there's no sign the group will back away from its role as self-appointed cost-effectiveness auditor.

ICER's origin

ICER emerged as a thorn in pharma's side in 2015 after it scored a $5.2 million grant from the Arnold Foundation and rolled out a program to scrutinize new drug prices. Suddenly, the organization—which had been evaluating everything from surgery techniques to talk therapy for depression—was drilling deep into pharma. Just months later, it unveiled its PCSK9 pricing slap-down. Dozens of evaluations would follow.

David Whitrap (ICER)

ICER times its drug reviews around FDA approval dates because that’s when decisions about pricing and coverage need to be made, Whitrap said. The first portion of each report compares a treatment's clinical benefits to those for existing treatments.

Then the experts pivot to cost-effectiveness. And while some new drugs are priced in line with benefits, he said, other prices are “completely untethered” from efficacy.

Bernstein's analysis shows that over the years, ICER has evaluated drugs in more than two dozen diseases, including 14 drugs for multiple sclerosis alone. Only one of the multiple sclerosis drugs won ICER's cost-effectiveness blessing—Sanofi's Lemtrada—but overall, a little more than a quarter of the treatments evaluated won backing after their assessments.

Partly because of price cuts for some drugs and shifts in ICER evaluation methods, namely using prices after rebates rather than list prices, the group's tally of cost-effective drugs actually mounts to 30 rather than 23, Whitrap figures. For instance, by his count, Humira, Enbrel and Stelara are cost-effective in psoriasis, and the PCSK9 drugs won check marks after Amgen, Sanofi and Regeneron lowered their prices.

And way back when—before the Arnold Foundation grant amped up its drug-pricing work—ICER deemed Gilead Sciences' Sovaldi cost-effective in treating hepatitis C, at least in the long run.

Plus, since the Bernstein analysis, the group has signed off on Johnson & Johnson's anticoagulant Xarelto and Amarin's blood-lipid therapy Vascepa and criticized pricing on two Duchenne muscular dystrophy meds—PTC Therapeutics' Emflaza and Sarepta's Exondys 51. It’s still waiting on pricing decisions for two peanut allergy treatments and Sarepta’s recently rejected Vyondys 53.

The nays and naysayers

Drugs that failed to secure ICER endorsements are some of the industry's most high-profile products, including Vertex Pharmaceuticals' cystic fibrosis treatments, J&J's new high-powered antidepressant Spravato and Novo Nordisk's next-gen insulin Tresiba. Among the class of cancer drugs known as PARP inhibitors, ICER deemed only AstraZeneca and Merck's Lynparza as worth the cost in BRCA-mutated ovarian cancer, according to Bernstein. Rival meds from Clovis Oncology and Tesaro—now owned by GlaxoSmithKline—lost out.

That pharma companies have pushed back isn't a surprise. But, perhaps surprisingly, some of those complaints haven't been in vain. ICER has reshaped its processes in some ways and revisited its conclusions as new data—and new pricing info—have emerged. For instance, ICER in 2017 rolled out plans to use rebate estimates from consultancy SSR Health in its reviews. When possible, ICER bases calculations on costs after rebates—net prices, in other words—rather than on the list prices that in some cases are far higher.

ICER also insists it's not the price tag, but the value that counts. CAR-T cancer meds from Novartis and Kite Pharma both scored ICER endorsements despite prices soaring to the hundreds of thousands of dollars range. “The United States is getting tremendous value out of pharmaceuticals,” Whitrap said. “There are treatments coming to market that are truly transforming patients’ lives.” 

Consider spinal muscular atrophy, a muscle-wasting disease that occurs at various ages and often renders patients unable to walk or perform other everyday functions. ICER initially decided Biogen’s drug Spinraza and Novartis' gene therapy Zolgensma were too expensive for the benefits they delivered. Spinraza costs $750,000 for the first year and half that for subsequent years, while Zolgensma costs $2.125 million and is intended to be a one-time cure. 

Later, when additional Zolgensma data debuted, ICER looked at the numbers and changed its mind. It called Zolgensma, the world's most expensive medicine, cost-effective.

So ICER isn't anti-innovation, Whitrap argues. Rather, he says the U.S. healthcare system can only pay for expensive new gene therapies like Zolgensma if “we stop paying for drugs that are slightly better (than existing meds), but are priced like they’re transforming lives."

What's the definition of 'transforming'?

Sometimes it's individual companies taking shots at ICER evaluations of their own products. But the trade group PhRMA has spent its own energy and resources critiquing the group's process, too. Among the common criticisms? ICER's reviews are biased, conducted with too little public disclosure and downplay benefits of drugs.

Lauren Neves (PhRMA)

And the industry isn't alone. After ICER's review of as-yet-unapproved peanut allergy drugs questioned their cost-effectiveness, patient advocates called the report "premature"; after all, it was based on analyst pricing estimates, not actual pricing decisions. Some analysts themselves said it was "biased." And one of the biotech companies involved said it failed to capture its med's value.

PhRMA's senior director of policy and research Lauren Neves acknowledges that ICER has made some changes the industry wanted. But the cost-effectiveness watchdog still has a ways to go to win her association's approval. PhRMA supports drug value assessments that are “unbiased” and “correctly value innovation," Neves said, but ICER's reviews don't "meet that standard," she said.

What would Neves change? For one thing, she'd like ICER's analyses to incorporate a broader range of benefits from new treatments, such as a child’s drug improving a parent’s ability to work. The group has used some nontraditional measures before; for instance, Whitrap says, ICER experts found Spark Therapeutics’ Luxturna an “intermediate value” based on contextual considerations, not traditional measures of cost-effectiveness.

Patients and drugmakers have warned that payers could use ICER's negative reviews to limit access to new drugs, but Neves didn’t offer any specific examples. CVS Caremark has started letting clients use ICER's work in coverage decisions, but the PBM didn’t respond to requests for an interview. 

Patient advocates also don't like the "quality-adjusted life years" measure used by ICER and other cost-effectiveness groups. The metric is simplistic and discriminatory, they claim.

PhRMA, for one, wants ICER to look at alternatives such as a "multicriteria decision analysis." Essentially, ICER could lay out some value parameters that payers and others using ICER's reports could customize; they'd "assign weight to different elements of value, and arrive at their own estimate of a treatment’s worth," Neves wrote in a June blog post.

The idea would address one of PhRMA's biggest complaints about ICER—or indeed any cost-effectiveness body. Neves figures one single entity shouldn't have the authority to review and endorse drug prices on its own. "[A]ll stakeholders have a role to play in the conversation," she argued.

Under PhRMA's proposed analysis, the "value elements" would be much broader. For instance, ICER might assess a treatment's benefits for a patient's family or its ripple effect in drug development and research—its "scientific spillover," in PhRMA's terms. ICER could also factor in the nonmedical costs of forgoing the new treatment, such as childcare expenses. 

"It has the potential to make value assessment customizable, transparent and comprehensive while incorporating other elements of value that patients care about," Neves added in the post.

'Constructive' disagreements

ICER knows it still has critics, but the pushback itself has changed, Whitrap said. When the group first started drug reviews, companies sometimes hit back with "vague" defenses of their pricing, he said. Now, they're more engaged in the work, and disagreements are more "constructive." 

There's reason for that, he figures. Drugmakers that win an ICER endorsement have “significantly better leverage” in coverage negotiations with payers. Novartis and Amarin, for example, have touted ICER endorsements for gene therapy Zolgensma and cardiovascular drug Vascepa. Amarin said it believes ICER's review underestimates Vascepa's benefits, but the endorsement "provides additional support for why medical insurance should broadly cover Vascepa" for high-risk patients who have elevated triglycerides despite using statins.

"Unlike their earlier tactic of avoidance, most manufacturers now realize how helpful it can be to have a favorable cost-effectiveness assessment from ICER," Whitrap said.

RELATED: Novartis slaps $2M-plus price tag on newly approved gene therapy Zolgensma—and cost watchdogs approve

In fact, after balking at ICER's intial assessment, Sanofi and Regeneron went back to the group when they'd posted long-term outcomes data showing Praluent cut the death risk for high-risk patients by 29%. The companies shared the data under a nondisclosure agreement, asked for a new review and when ICER had run new numbers, cut the drug's price to fit within the recommended range for those patients.
After that, "payers began to broaden coverage criteria that previously had been notoriously difficult for patients and physicians," Whitrap said. Express Scripts unveiled an agreement to make the drug more accessible.
And then there's Dupixent, Sanofi and Regeneron's biologic therapy for atopic dermatitis, otherwise known as eczema. Instead of bracing for blows from ICER after launching, they reached out for feedback—and agreed to price the drug within a recommended range.

Dupixent hit the market at a list price of $37,000 per year, which Whitrap said was "far lower" than Wall Street analysts had expected. ICER endorsed it as cost-effective (though it would later conclude Dupixent isn't cost-effective in asthma).

A Sanofi spokeswoman said the company “understands that independent reviews of its medicines and vaccines, such as those conducted by ICER, are a part of the process to make them available to patients.” Working with ICER is one of the ways Sanofi shows it's committed to making products accessible, she said.

But the company has its own internal process for assessing value, the spokeswoman pointed out. The company "rigorously and holistically" assesses its drugs and vaccines, looking at their clinical benefits but also their value in economic and social terms.

“We have been working with ICER for several years, and during this time we have seen it expand its review process to include more opportunities for stakeholder input but ICER’s assessments and conclusions are entirely its own,” she added.

Praluent's price cut hasn't turned that drug into an overnight sales success; rival Amgen slashed Repatha's price, too, and went after the partners for patent infringement in a hardball lawsuit that's deterred some uptake. It's too early to tell whether Sanofi and Regeneron's recent win in that case will make a difference.

Dupixent, though, is well on its way to blockbuster sales just a couple years into its rollout. There are plenty of reasons for that—including sheer efficacy—but a price deemed cost-effective can't have hurt.

Role in drug pricing policy

As the drug pricing debate shows no signs of waning in Washington, D.C., ICER's role could continue to grow—and in the context of other proposals on the table, that might not be so terrible. In a note to clients after exploring ICER's many decisions, Bernstein analyst Ronny Gal wrote in July that a drug pricing policy incorporating cost-effectiveness reviews could be a “least bad” option for the industry. 

If sentiment against pharma worsens, Gal wrote that he could see the industry coming to accept a potential proposal from House Speaker Nancy Pelosi to force negotiations for top drugs in the U.S. That plan is expected to include cost-effectiveness reviews too, he wrote.  

Obviously, drugmakers would prefer to be able to set prices without second-guessing, but a system linking prices to cost-effectiveness reviews would be better for the industry than the International Pricing Index proposed by the Trump administration, the analyst wrote. And the Department of Health and Human Services has also unveiled proposals to allow lower-cost imports from Canada, another idea pharma opposes. With Congress getting back into session this week, it's anyone's guess as to which pricing proposals will gain traction there. 

ICER's reviews have made for lively debate in the pharma industry, and that's not likely to change even if pharma companies are cooperating more often. Coming up are some blockbuster assessments, according to the group's plan for the coming year.

The group recently released its potential assessment topics for 2020, including multiple sclerosis candidate ozanimod from Celgene, which is one of the products key to Bristol-Myers Squibb's megabuyout of that company.

Rival HIV combos from ViiV Healthcare and Gilead are also on the list, as are a cadre of drugs in an entirely new field—nonalcoholic steatohepatitis. That group includes meds from Intercept Pharmaceuticals, CymaBay and Allergan, and more.

If those don't sound debate-worthy, ICER has some other plans likely to stir more controversy. The group has said it'll start scrutinizing pharma's costliest price hikes on older medicines, a topic that's made for countless headlines in recent years. Clearly, there's plenty of back-and-forth yet to come.