Sherpa guides have led explorers through the Himalayas for many years. In such challenging conditions, an effective guide is knowledgeable, experienced, courageous, and tenacious. The Institute for Clinical and Economic Review (ICER) evaluates the clinical and economic value of prescription drugs, medical tests, and other health care and delivery innovations. And while the same adjectives used to describe Sherpa guides could be used to describe ICER, the question is — If ICER leads, will payers follow?
The inputs
Payers find it difficult to accept ICER guidance when the models are not based on their own costs and experience. ICER analyses are based on the general population, not a payer’s population. Some payers serve a younger population, some an older population; some serve a healthier population, some a sicker population. Whenever possible, payers prefer to use real-world evidence to guide their access decisions, especially if the evidence mirrors their own experience.
ICER’s net-price estimates are blind to payers’ actual net cost — and in crowded, poorly differentiated markets, it all comes down to cost. Manufacturers may give payers rebates in exchange for access. As formulary and medical policy decisions differ across payers, so does access — and net costs.
Payers would welcome an opportunity to enter their own data into ICER’s models, and this could be achieved a few ways. If the ICER models were open-source and accessible (they’re not), then payers could either upload their data to a secure website or download the models for custom analyses. Alternatively, for a fee, payers could share data with ICER in confidence — similar to how manufacturers share data with ICER — and run them through ICER’s proprietary models to yield custom, relevant reports.
The process
Payers think manufacturers’ budget impact models are not worth the squeeze, believing that they are biased always to “demonstrate” savings. While ICER reports are more transparent, the models underlying them are proprietary. The black-box nature of these models slow progress in earning payers’ trust. But we do know a few things about how ICER arrives at a determination of value.
ICER uses quality-adjusted life years (QALYs) to calculate cost-effectiveness thresholds. Payers don’t. Some payers have a relatively longer relationship with members, some a relatively shorter relationship. Given the long-term nature of the measure, QALYs are not relevant to payers. All value models are wrong — some more than others, and QALYs are no exception. The way QALYs assign values to young, old, and disabled patients is not without controversy.
To its credit, the ICER framework also includes “direct health benefits that are not adequately captured by the QALY,” and its reports provide payers enough information to reverse-engineer the ICER models. Together, these aspects may help payers to approximate ICER models in ways they deem desirable. More likely, however, payers would likely spend less time and money building and refining their own models from the bottom up as they have done so for many years — and would perceive their own models as being more trustworthy.
The outputs
ICER shifted from two-year budget timeframes to five-year timeframes and acknowledges that doing so reduced the utility of their analyses for most insurers. ICER thinks payers should be able to use its new potential budget-impact graph to closely estimate a two-year budget impact. It is hard to explain why ICER would not go the short distance and provide both measures in an attempt to meet payers’ information needs better.
ICER maps out potential budget-impact outcomes under different uptake scenarios. Budget impact is a function of cost and utilization, and payers make access decisions to manage utilization — making them partial masters of their own destiny. Payers are then left to predict how their own access decisions will impact utilization and their budgets. So, while ICER provides a map upon which payers could possibly chart their own course, payers do not need any help predicting budget impact. Doing so is a cornerstone of the insurance industry — and payers and their actuaries have this down to a science.
Sure, payers consider cost and even cost-effectiveness when making access decisions. But that’s only part of the story. A payer’s willingness and ability to accept, reject, or negotiate a manufacturer’s price is largely dependent on the market context — the availability of multisource generics, the amount of competition, or whether there are brands with dominant market share, to name a few. ICER reports do not even attempt to navigate through the complex array of cost-related considerations payers tackle on a daily basis, including state mandates and access requirements from employer and government purchasers.
Surveys describing payers’ use of ICER reports — whether, when, and how reports are reviewed — do not measure the degree to which these reports impact payers’ access decisions. To triangulate their position, payers consider ICER’s (and other health technology assessment bodies’) cost-effectiveness analyses — but also much more information ICER ignores altogether, including, but not limited to: couponing; patient-assistance programs; the size and rate of price increases; discounting (shout out to the IDNs out there); and, as previously mentioned, rebates — and related outcomes for the small but growing number of value-based contracts.
True north
It is not likely that payers will follow ICER’s lead, but ICER Sherpas may help guide payers toward safer paths or away from dangers in the form of relevant metrics and expected price ranges. In doing so, ICER may help payers find better ways to navigate and arrive at value on their own.
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