Nonprofit snags $5.2M grant to investigate U.S. drug pricing

ICER President Steven Pearson

As drug costs continue to rise, payers and the public are calling for more transparency in how Big Pharma sets its prices for new meds. The benefits of the drugs do not outweigh their costs, some groups say, and more needs to be done to make sure companies are pricing accordingly. Now industry-watchers have a new ally, as a nonprofit nabbed $5.2 million in private funding to investigate drug pricing in the U.S.

Houston, TX-based research organization the Institute for Clinical and Economic Review (ICER) got a grant from the Laura and John Arnold Foundation (LJAF) to look at how new drugs are priced and evaluated. As part of the program, ICER will create public reports after a drug is approved by the FDA, including information on the drug's cost-effectiveness and how it might impact healthcare budgets. The organization will churn out 15 to 20 reports during the first two years of the initiative, and will release the first two reports in September 2015, ICER said in a statement.

The way ICER sees it, the public can't be too sure that it's getting the most bang for its buck with the high costs of new meds. Under the new initiative, the organization will be able to track how much a drug actually improves patients' lives and delivers value to the healthcare system.

"The United States spends more on health care than any other nation. Yet it does not produce the best results," LJAF Vice President of Venture Development Kelli Rhee said in a statement. "By expanding the use of evidence and evaluation, ICER will help develop a fairer, more effective system that will allow hospitals and medical centers to improve patient health while lowering costs."

ICER's first two reports will focus on PCSK9 meds and Novartis' ($NVS) recently-approved Entresto drug for heart failure. Sanofi ($SNY) and Regeneron's ($REGN) new cholesterol fighter Praluent and Amgen's ($AMGN) Repatha are expected to cost more than $8,000 per year, and almost 80% of participants in a recent InCrowd survey saw patient cost as a barrier to use.

Express Scripts CMO Steve Miller

And Novartis is already anticipating pricing pushback for Entresto, saying earlier this month that it would offer an outcomes-based plan for the drug to appease payers. But some are skeptical about the drugmaker's proposition, including Express Scripts ($ESRX) CMO Steve Miller, a vocal critic of Big Pharma's pricing.

But Miller has higher hopes for ICER's new initiative. ICER draws most of its funding from nonprofit organizations and hasn't used cash from manufacturers' for its drug reviews, The Wall Street Journal reports.

"ICER's new program will make a huge difference by providing what is sorely needed: an independent, trusted source of information about new drugs," Miller said in a statement. "I believe many payers and policy makers will find this information of critical importance as they evaluate the new drugs, and we look forward to using it to help us improve the ability of patients to get access to new, innovative drugs at a price the system can afford."

- read ICER's statement (PDF)
- here's more about the program
- get the WSJ story (sub. req.)

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