Pharma companies may not like their products being the subject of ICER reports, but they can provide a jumping-off point for manufacturers to expand the conversation of the value of new medicines in the rare disease area.

In the United States, even as the current administration is proposing ways to rein in high drug prices, the question of value – for payers and for patients – rarely comes into the public debate. Unlike Europe, where the price and value of therapies gets set by government-level health technology assessment (HTA), in the United States, each private insurer has their own HTA systems, but the federal government does not. With new and ever more expensive therapies for rare diseases coming into or about to enter the market, all of these bodies are struggling with the value question – whether these therapies are effective, and if they are worth the high prices being asked by pharma and biotech companies.

Enter the Institute for Clinical and Economic Review (ICER). A private, nonprofit organization that issues reports about the effectiveness and value of therapies, ICER is trying to establish unofficial national benchmarks for cost effectiveness and value. ICER made headlines in April and May with evaluations of drugs for spinal muscle atrophy and Duchenne muscular dystrophy. Even as manufacturers hotly dispute ICER’s findings, and private payers have different budgeting goals that ICER’s methods do not take into account, experts believe that manufacturers are going to have to better address the questions the organization raises.


In the crosshairs

Right before the Memorial Day holiday weekend, ICER came out with its draft report targeting two marketed drugs for Duchenne muscular dystrophy – Sarepta Therapeutics’ Exondys 51 and PTC Therapeutics’ Emflaza – as well as another drug, golodirsen, being developed by PTC that targets another genetic mutation responsible for Duchenne. The condition is an X-linked neuromuscular disease in which loss of expression of the protein dystrophin results in a progressive loss of muscle function and an early death. About 13,000 boys in the United States are affected.

ICER concluded in its analysis that there was not enough clinical evidence that Exondys 51 was cost-effective, and similarly viewed golodirsen as well. And the organization stated that Emflaza had only a modest clinical benefit and would have to priced lower to be considered cost effective. Sarepta and PTC both disputed the findings.

According to Sarepta, “ICER’s approach is fatally flawed as it relates to rare and genetic disease for a number of reasons. As a result, we have chosen not to participate in reviews by ICER until it adapts its model to address the inherent limitations and biases that compromise its evaluations of therapies intended to treat patients with serious, rare diseases.”

The company also says, “Through its conclusions, ICER sends a clear message to innovators that developing rare disease therapeutics is not worth the effort, and to patients – often children who are dying with no other treatment options – that their lives are not worth the investment.”

As for the spinal muscular atrophy drugs Spinraza and Zolgensma, ICER concluded in April that while both medicines provided substantial health benefits, the price for Biogen’s Spinraza is too high to align fairly with these benefits, and urged fair pricing for Novartis’ Zolgensma to support sustainable access to innovation. Spinraza’s list price in the United States is $125,000 per injection, which puts the treatment cost at $750,000 in the first year and $375,000 annually after that.

Spinal muscular atrophy (SMA) is a rare, genetic neuromuscular disease with the most severe cases affecting infants and young children. About 500 new cases are diagnosed each year.

Zolgensma was approved May 24 by the FDA. After the approval and the announced price for the product, ICER published an addendum to the April report concluding that the price set by Novartis falls within the upper bound of ICER’s value-based price benchmark range.

“Insurers were going to cover Zolgensma no matter the price, and Novartis has spoken publicly about considering prices that approached $5 million,” says Steven D. Pearson, M.D., M.Sc., president of ICER. “It is a positive outcome for patients and the entire health system that Novartis instead chose to price Zolgensma at a level that more fairly aligns with the benefits for these children and their families.”


Don’t get frozen by ICER

Even though pharmaceutical companies may not like ICER’s methods of determining value, the organization’s influence is growing – and payers are listening.

In August 2018, CVS/Caremark made headlines by announcing that it would allow Caremark clients to exclude drugs from their formularies that did not meet ICER’s benchmark of $100,000 per quality adjusted life years (QALY).

FDA-designated “breakthrough” therapies are excluded from the program, which is focusing on expensive, “me-too” medications that are not cost effective, “helping put pressure on manufacturers to reduce launch prices to a reasonable level.

“We believe as more PBM clients adopt such programs, manufacturers will begin to moderate launch prices,” CVS executives say. “No one but manufacturers have, until now, had any control over the launch price of newly patented drugs. This new approach, harnessing the power of the market, could change manufacturer behavior. CVS Caremark continues to use other PBM techniques to help lower costs for payors and their members, but lower launch prices could help bring about real deflation in drug prices.”

With ICER garnering headlines “it’s kind of a tricky situation right now” for many pharma manufacturers, says Adrian Garcia, senior VP, head of payer and integrated health strategy at GSW.

“You want to engage with ICER, but you also don’t want to give them credibility,” he told Med Ad News.

Despite the news headlines generated by ICER’s reports, they have not had much of an influence on policy or formulary decision makers, Garcia says.

“I don’t think anybody disagrees that it is going to evolve and we’ll live in a world where HTAs work very similarly to those outside of the United States but it’s not quite there yet,” Garcia says. “The concern that many manufacturers have is that if they start to engage organizations like ICER proactively or even reactively, it almost gives them credibility.”

Still, according to Garcia, “there is plenty of engagement, but most of it is behind closed doors, through back channels, trying to stave off the influence that organizations like ICER will have.”

According to Jacki Chou, senior director, Precision Health Economics, although payers have been doing their own economics modeling before and still do, “With the introduction of ICER into the marketplace and that kind of information being more readily available has shifted a lot of those conversations,” Chou says, “But a lot of these pieces that we are getting in the marketplace are just extra tools for them to help in the decision making process.”

The first thing she would advise clients who have not yet been exposed to an ICER review before is start educating internally.

“With ICER growing in their resources, growing in their influence, we really are encouraging everybody, even if they haven’t been listed for an evaluation,” Chou says. “Start with the educational piece internally, and from there, come up with a plan. They should talk to patients and talk with patient advocacy groups and talk to physicians about what they think the value add is for your treatment, and what is the disease burden.”

Helping payers understand the burden is essential, Chou says, and adds that understanding should encompass taking into account more than just economic and epidemiological factors.

Clients should consider how difficult it may be for a rare disease patient to finally get a diagnosis and who is involved with that process. Once the treatment has started, another consideration is the way it is administered. “Are we needing to go into the clinic for the administration or can you get it from home?” Chou told Med Ad News. “What does the overall health education look like? What are the comorbidities? Are they [the patients] children or are they adults?”

Considering all of these factors can help manufacturers emphasize the novel aspects of the innovation as well as the classic innovation, Chou says.

John Shamsey, principal, Evoke Navience, agrees that his pharmaceutical clients should prepare to have their therapies reviewed by ICER, especially for products that are highly anticipated in the market. “I don’t think they need to tailor their value propositions to the ICER review metrics, but what they really need to prepare for is how are they going to message or respond to customer questions and inquiries to the headlines that may potentially come out from the ICER reports,” Shamsey says.

In looking at what ICER said about Zolgensma and Spinraza, “the review was more about the headlines than it was about the impact on access,” Shamsey says. “The learnings, first and foremost, are there were some very positive clinical effectiveness statements that came out from ICER about both products.”

Shamsey points out how Dr. Pearson, ICER’s chief medical officer, said the products both improved the lives of children with SMA. “I think that when you read the comments about how Biogen’s high-quality clinical trials for Spinraza should provide a model for others investigating treatments for ultra-rare conditions, these are all positive things,” Shamsey told Med Ad News. “But the headlines are around the cost or cost effectiveness of the products.”

In his opinion, the ICER report had no meaningful impact on Spinraza’s access. “If you look at the product, it’s covered well across customer segments, and prior authorizations are very similar to other specialty products,” Shamsey says.

Ultimately, ICER’s position about reviewing the cost effectiveness of a product without really knowing the cost “isn’t the best idea, because it leads to speculation and potentially the wrong impression within the marketplace,” Shamsey explains. “There are certainly some deficiencies from some of the ICER reviews and how those cost-effectiveness reports can be used on a broader level.”
ICER’s measures – which use QALY – according to Shamsey, are difficult to apply to commercial payers because they have a diverse population, with other cost considerations.

Garcia says “there are some fundamental flaws [to ICER’s measurements] that manufacturers can take advantage of.” For one thing, the measurements are not that different across disease states. The data sets ICER uses include cherry-picked data from various studies instead of the comparative studies FDA demands from manufacturers. The opportunity for pharma is to engage the payers, whether private or Medicare, and articulate how their data for a drug may be more relevant to the population being covered by the payer.

Another opportunity comes from the fact that ICER’s evaluations are “very black and white,” Garcia says. “Drugs are either low value or high value. But a payer has to consider so many more things to understand the value that the product is going to deliver to their members. They are going to look at what their customers or clients want from a consumer demand standpoint. They may want options that are more convenient, but aren’t necessarily offering value from an ICER standpoint. Maybe there aren’t additional side effects being captured in the way that ICER is using their analysis that are out in the real world.”

By using measures such as real world evidence and subpopulation data, manufacturers can articulate the value of their value in a different way, Garcia says.


Generating true value measurements in rare diseases

According to Shamsey, for pharma companies, “It’s not new or alternative methods of determining value, but more like alternative strategies.”

One of the strategies pharma is looking at is alternative payment models. The more traditional therapies for rare diseases are paid for over time, based on the dosing and the need for chronic therapy or replacement therapy,” Shamsey says. “And when you think about the new cell or gene therapies, they are going to be administered once or a few times, with the potential of being cured, and this creates a cost dilemma, because it brings all the costs back to one or a few treatments. When that’s potentially millions of dollars, you have to look at alternative payment models, whether they’re annuity based or they’re pay-for-performance agreements, they have to be part of the equation.”

Ultimately, Shamsey says these are medicines that have the opportunity to fundamentally transform people’s lives, and it’s up to manufacturers and the payers, whether commercial or government, the policymakers and the regulators to work together and identify paths forward, whether there can be alternative payment models that can be a reality within the market.

According to Zac Stillerman, president of Precision Xtract at Precision Medicine Group, “The questions of what is the value and who’s on the hook for making sure that the value happens, are kind of two different things.

“Our view is we want to help clients and encourage all life science companies to get their value story right, make it as transparent as possible, consider as many different variables as possible, and really make that airtight. But even as that happens, a lot of these drugs are expensive and the patient populations are much smaller or narrower than for drugs in previous generations.”

Often this means prices have to be a lot higher. “So that’s where we advise clients that this is going to be a situation where they’re going to be more likely want to use a value-based pricing scheme, or they’re going asked to use a value-based pricing scheme, or some sort of installment-based payment scheme. Our view is that those are going to be used more frequently in the future, just because the prices are so big and there’s no guarantee that the payer who pays for them, isn’t necessarily going to be the insurance company that benefits from that because there’s so much churn with patients’ different insurance plans.

“So there’s a natural challenge there [with rare disease therapies] because some of the benefits don’t become apparent until three or four or five years down the line, and you have to find drugs that have near-term impact points that can be measured,” Stillerman told Med Ad News. “And obviously it makes it interesting to us if there are state Medicaid or federal Medicare type plans which will keep patients for longer that might be more interesting use cases for some of those mechanisms to take place.

And, Stillerman adds, it’s not enough these days to have a great value model, “you have to figure out how to communicate it, and how you communicate it is different than what it was 10 or 15 years ago.

“You have to think about which payers are most important, and how do you megaphone that message?” he says. “What are the materials that you’re using, and how do you gain their attention in the world where there may be another drug or another treatment that is similar, so there’s noise in the market? And the amount of expense and time that it takes to do that is much more than it used to be. So not only do [our client]s have to start earlier, they also need to commit more resources to it.

“And then if you’re fortunate enough to get approval to be on formulary or to get payment, you then have to undertake an enormous education campaign with HCPs and prescribers to make sure the drug performs the way that you think it’s going to, in terms of getting into the hands of people who need it.”

Chou points out that while a lot of innovation in healthcare happens in the biopharmaceutical arena, defining that value remains difficult. “We know there’s value there, but we’re pushing up against cost. So the question that our manufacturers and our clients are asking themselves, or should be asking themselves, is, ‘Are we thinking about our value in the right way?’ When we have clients coming to us, wondering about ICER, or knowing they are going to be evaluated or having just gone through an evaluation, the things that we encourage them to think about really what they are bringing to their patients beyond that surrogate or final endpoint or any final measure from clinical trials.”

This scrutiny on cost has helped bring forward the patient voice, giving manufacturers a way to discuss the patient journey in a concrete and really quantifiable way, Chou says.

“We also to encourage them to think about how they know the patient the best, they’ve spoken to payers, they’ve spoken to providers, they understand the context of the journey. And these additional aspects of value that are really important to patients and their families – what are ways that we can quantify those and capture them from an economic perspective?”

There are areas of novel value manufacturers can use, Chou says. One example is what Chou called option values.

For instance, in HIV, the initial treatment, AZTs, “weren’t great drugs but they offered a little bit of life extension, but the side effects weren’t great, the profile wasn’t great.” Chou told Med Ad News. “But there was a cohort of patients for whom AZT enabled them to live long enough to see highly effective antiretroviral treatments come to market, which were a gamechanger.”

That kind of value sometimes can get missed, Chou says. “We’ll see all kinds of criticism about a lot about me-too drugs, that they just offer an incremental benefit, but I think that misses the bigger picture of what that means for the lifetime trajectory of a patient, or a cohort of patients, for whom that extra six months or one year gets them to that next innovation.”

Manufacturers should also look at the value of hope, Chou explains, which often can be associated with oncology medicines.

“When we talk about economic models what we usually think about is the mean or the median, what’s the average value to the average patient,” she says. “But for some treatments, what that misses is the long right tail of survival [right-skewed distribution], that small number of patients who might see a really long life extension. What we have found is that potential for being that 20 percent of patients who get that extra two years has so much value to bring to the table for them.”

And there are some values manufacturers can highlight for healthy patients, Chou believes. “We think about it as insurance value, or the value of altruism or equity,” she says. “For insurance value, we think about what we’re willing to pay to ensure coverage of a disease, on the off chance that you might get it in the future.

And then there is the value of altruism equity. There are some structural inequities in our healthcare system and there are some diseases, such as sickle cell disease, that disproportionately effects these types of disadvantaged populations. What could a cure mean, in disease areas like that, would be really novel in how it addresses the underlying health system inequities, and what’s the value in that? So thinking creatively about these kinds of stories for the patient are helpful in contextualizing what this innovation means for a really important group of people.”