What is ICER and how does it impact your patients?

| January 22, 2024

What is ICER and how does it impact your patients?

By Matt Reiter
Principal, Capitol Associates

Most physicians pursue a career in medicine so they can help patients. Becoming a physician takes an incredible investment of time, energy, and resources to complete the education and training necessary for their specialty. Despite years of preparation and Board certification, one of the most frustrating experiences for physicians is having their medical expertise overridden by health plans, pharmacy benefit managers and other entities. Prior authorizations and step therapy requirements are perhaps the most common challenge to clinical judgment. One physician who uses YouTube to comically illustrate his experiences aptly describes prior authorization “as health plans practicing medicine without a license.”

Health plans utilize prior authorization and step therapy to control what they spend on health benefits. In one sense, this purpose is laudable. It is good to know that  health plans are trying to control medical costs. However, these utilization control tactics have become increasingly burdensome and superfluous, causing unnecessary delays in patient care — sometimes to the point of harm.

Many allergists are not fully aware that there is another contributor to how patients access medication we prescribe – the Institute for Clinical and Economic Review (ICER).

ICER is an independent, non-profit organization made up predominantly of economists that conduct economic reviews of new medications with the goal of determining the “value” of new medications and therapies. Many question how “independent” ICER actually is, since the source of much of its funding is directly, and indirectly, from the insurance industry. The FDA already reviews and approves new treatments and therapies based on their safety and clinical effectiveness. ICER’s value assessments can have a strong influence on pricing decisions for a product.

ICER’s work is as controversial as it is influential. Its formula for calculating drug prices often contradicts manufacturers. Among the most controversial aspects of ICER’s process is its reliance on a concept called Quality-Adjusted Life Years (QALYs) to assess a drug’s value based on its ability to lengthen or improve life. However, this academic approach to a drug’s value might not align with the real-world experience of a patient whose life and well-being depends on that drug.

The QALY’s vision of “best health” may be unobtainable for many and does not account for differences in the elderly and those with chronic illnesses. Many think that using the QALY concept violates the Americans with Disabilities Act. Medicare has banned using the QALY formula in making coverage determinations, yet it remains the cornerstone of ICER determinations.

Another point of controversy is how ICER analyzes drugs that are still pending FDA approval. It uses clinical trial data (usually supplied by the manufacturer) for its assessments.

For ICER, determining a drug’s “value” also includes comparing it to other products that treat the same condition. This comparison does not always account for the clinical differences between the products and how different populations access each medication.

Health plans and Pharmacy Benefit Managers (PBMs) increasingly rely on ICER’s assessments in their negotiations with manufacturers. For this reason, many manufacturers cooperate with ICER by supplying data they think should be included in the assessment.

Organizations such as ICER are more accepted in Europe, but its input is still controversial in our market-driven health care system. In principle, there is nothing wrong with data-informed drug pricing decisions. However, ICER’s approach to how it assesses a drug’s value combined with its growing prominence in pricing decisions has placed it at the center of the drug pricing debate.

PBMs shoulder much of the public blame for making it harder for patients to access the medications prescribed by their physicians. However, PBM decisions are increasingly influenced by ICER. The combined effect of these entities means economic factors are receiving more weight than a physician’s clinical judgment.

The Advocacy Council is focused on ensuring medication is both affordable and available to patients. While price and affordability are certainly an essential part of the access equation, going too far with price controls can result in a manufacturer’s withdrawal of a product from the market, , such as Flovent, which was discontinued as of Jan. 1, 2024.