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 Then a small but increasingly influential drug-pricing research
organization, the Institute for Clinical and Economic Review (ICER),
said the treatment only justified a price between $2,800 and $5,000.
Shortly after, Gilead announced it would charge about $3,100 for a
five-day treatment and $5,700 for ten days - in line with the ICER
recommendation.
The episode illustrates the growing power of the Boston-based
nonprofit to hold down U.S. drug prices. Over the past five years,
ICER has pressured drugmakers to lower the cost of nearly 100 drugs.
It aims to play a similar role with emerging COVID-19 treatments and
vaccines. Health insurers increasingly use ICER's fair-value
analyses to limit access to expensive drugs or to negotiate steeper
discounts with drugmakers.
(For a graphic on drugs ICER has rated overpriced, click https://graphics.reuters.com/USA-DRUGPRICING-LOBBYING/0100B5JY41G/index.html)
The industry has moved aggressively to combat the threat to its
profits in two ways: With open criticism of ICER's formula and with
a stealthier campaign to undermine its credibility through proxies,
including veterans' groups and organizations that claim to advocate
for patients but have ties to the pharmaceutical industry, Reuters
found in a review of industry connections and funding among groups
targeting ICER.
Two such groups – the Partnership to Improve Patient Care (PIPC) and
Value our Health – are led by employees of Thorn Run Partners, a
Washington-based lobbying and public relations firm that counts
nearly a dozen drugmakers as clients. PIPC denied it is part of a
larger industry-financed proxy campaign to undermine ICER's impact.
Thorn Run declined to comment, and Value Our Health did not respond
to inquiries.
As remdesivir gained momentum, PIPC complained to ICER in a June
letter that its methodology, which examines how a drug improves
patient quality of life, was unfair for COVID-19 drugs. It also held
a webinar for patients criticizing ICER’s methods.
The group’s chairman, former U.S. Democratic Representative Tony
Coelho, argued in the letter that ICER’s methods yield a flawed
value assessment for COVID-19 drugs that could lead insurers or
government programs to limit coverage to the elderly and people with
disabilities because ICER’s formula attributes a lower value to
their medicines than those for healthier patients. In a statement to
Reuters, Coelho attacked ICER’s formula as a flawed
“one-size-fits-all assessment.”
Gilead also pushed ICER for a higher price during its remdesivir
review. The firm told Reuters that ICER’s assessment failed to
consider savings from shorter hospital stays and underestimated how
much insurers or the government would be willing to pay.
Remdesivir is the only COVID-19 treatment ICER has assessed so far.
Steven Pearson, a Harvard academic who started ICER, said it will
likely review more coronavirus treatments if they make it to market,
including potentially those being developed by Regeneron and Eli
Lilly and Co that use antibodies to generate an immune response. The
two companies declined to comment.
ICER’s assessments are not used to deny care to patients based on
their health, Pearson said. Rather, the formula helps insurers or
government programs choose the most cost-effective treatment for a
specific condition, based on its price and benefit in providing a
better quality of life. Pearson pointed out that the formula has
long been used in the health systems of countries including England,
Canada, the Netherlands and Sweden.
“We don’t think of them as hotbeds of discrimination against sick
people,” he said, “and neither are we.”
(Graphic: Overpriced drugs? - https://graphics.reuters.com/USA-DRUGPRICING-LOBBYING/0100B5JY41G/index.html)
PHONY GRASSROOTS CAMPAIGN
The industry has followed the same playbook before: soliciting
criticism from outside groups - some of which it finances or staffs
- to create the impression of a broad-based patient uprising against
ICER’s pricing assessments rather than an industry push to protect
profits.
Last year, ICER invited input as it revamped its assessment methods.
Two of more than 50 comment letters came from six California
veterans’ groups, who blasted an ICER contract with the U.S.
Department of Veterans Affairs (VA), saying its formula denies
veterans care and “inherently discriminates” against people with
disabilities.
But no one from the veterans’ groups wrote the complaints. Officials
from the organizations told Reuters they lent their names to letters
that were composed instead by Peter Conaty, the pharmaceutical
industry’s go-to lobbyist in California. A half dozen health policy
specialists told Reuters that the veterans’ complaints look like
part of an “astroturf” campaign – a phony grassroots movement backed
by corporate interests. Conaty did not respond to requests for
comment.
Such under-the-radar PR efforts underscore the industry’s
determination to protect its pricing power in an era when expensive
new drug therapies are increasingly under fire for their role in
soaring U.S. healthcare costs. The battle for influence over drug
prices could have far-reaching effects on consumers, insurers,
employers and the government, industry and policy experts said.
Matt Eyles, president of insurance lobby America’s Health Insurance
Plans, said ICER plays a key role in holding down “out of control”
drug prices. “Big Pharma is doing everything in its power -
including pushing other groups to levy false claims of analytical
bias and discrimination - to undermine ICER’s long history of
independence and its commitment to bringing value into drug
pricing.”
The VA, which covers health care for more than 9 million people -
veterans and their family members - started using ICER drug-value
assessments in 2017 to negotiate lower prices with pharmaceutical
firms. VA spokeswoman Ndidi Mojay said the agency uses ICER’s
research for those negotiations but not to limit treatments. The VA
strives to provide veterans the best possible care and taxpayers the
best value, Mojay said.
“ICER helps the department do just that,” she said.
PRICING QUALITY OF LIFE
ICER uses a decades-old formula called the quality-adjusted life
year (QALY) – the cost of one year of good health for one patient –
to estimate fair value. European nations have long used QALY to
guide their drug coverage, and ICER defends it as the gold standard.
The organization is filling a void left by the federal government,
which does not negotiate drug prices for Medicare, the healthcare
program for disabled and older Americans, and Medicaid, which serves
the poor. Pharmaceutical industry representatives say they fear that
ICER is slowly taking over that function for the government and
insurers. Congress banned the Medicare program from using QALY to
evaluate drug prices in the 2010 Affordable Care Act - known as
Obamacare - after the industry lobbied for such a provision.
[to top of second column] |
The industry’s largest U.S. trade group - the Pharmaceutical Research and
Manufacturers of America, or PhRMA - has publicly criticized ICER’s formula as
undervaluing drugs, arguing it fails to consider certain patient benefits, such
as the ability to return to work. Randy Burkholder, one of PhRMA’s top
lobbyists, called the method “fundamentally and intractably” flawed in an
interview. The National Pharmaceutical Council, an industry-financed research
group, has regularly criticized ICER in the media, arguing drugmakers will
invest less in future treatments if ICER’s recommendations limit prices.
Groups including PIPC are parroting the industry arguments while claiming to
represent patients - without disclosing their industry ties, according to a
Reuters review of the groups' press releases, blogs, webcasts and letters. Value
our Health - which has been represented by Shea McCarthy, a Thorn Run public
relations partner and lobbyist - is one of a half dozen organizations who has
regularly flooded health and policy journalists with emails lambasting ICER.
Sara van Geertruyden, PIPC’s executive director, is also a Thorn Run public
relations partner. She said the group advocates for patients and denied that
PIPC is a proxy for pharmaceutical-industry interests or that it has concealed
its industry ties. She blasted ICER as a “payer-focused” organization delivering
skewed assessments that allow insurers to deny patients access to drugs. “Is it
any surprise patients would be concerned?” she asked.
Nicole Longo, spokeswoman for the PhRMA trade group, did not answer detailed
questions from Reuters about whether it was directing a campaign through proxies
to undermine ICER. Longo provided PhRMA’s comments to ICER on its remdesivir
pricing assessment, which called its methodology biased and “designed to devalue
remdesivir and other COVID-19 treatments.”
The National Pharmaceutical Council’s Interim Chief Executive Officer Robert
DuBois said that it does not advocate or lobby for the drug industry. ICER’s
methodology is an inaccurate measure that does not fully account for how a drug
helps patients or society, he said.
In January, after ICER called new sickle cell treatments too pricey in a draft
report, Value our Health, PIPC and sickle-cell patient groups pushed patients
and caregivers to report disease-related costs to ICER to “help ICER put a price
tag” on sickle-cell expenses. ICER postponed the review process due to COVID-19
and has not issued a final report.
Last fall, Reuters reported that CVS Health Corp, one of the biggest U.S.
pharmacy benefit managers, decided to scale back a new program for employers
that would exclude coverage of drugs that ICER says are not cost effective. The
move followed a pressure campaign by PIPC against CVS. At the time, CVS cited
fierce criticism from patient groups as the reason for backtracking. CVS Chief
Medical Officer Troy Brennan said, in a statement to Reuters, that CVS still
uses ICER’s analyses in a drug-coverage plan for its own employees and a small
number of other clients.
The PhRMA Foundation - the trade group’s nonprofit public health advocacy arm -
has spent $3 million on research into alternative methods of determining a
drug’s value, according to foundation announcements. Foundation President Eileen
Cannon said that the foundation consults with PhRMA, the industry group, but
makes decisions on academic grants independently.
ICER responds to industry accusations of discrimination by arguing that its
review process is flexible and considers additional measures besides QALY when
warranted. As an example, ICER points to its verdict on Luxturna, an
$850,000-per-patient gene therapy from Spark Therapeutics Inc, now part of Roche
Holding AG. Luxturna improves the sight of children who have a rare genetic
disease causing blindness. Though the QALY numbers did not support that price,
ICER determined that Luxturna was cost-effective because it reduced the burden
on the children's’ caregivers.
PhRMA director of policy Lauren Neves the Luxturna example was an exception to
ICER’s typical practice.
DRIVING DOWN DRUG PRICES, PROFITS
ICER started focusing on drug prices in 2015 and has since evaluated nearly 100
treatments, taking on those that insurers worry will raise overall health-care
costs. ICER has considered only a handful of those therapies to be
cost-effective at full list price, and only a third to be fairly priced after
considering drugmaker discounts, according to data that ICER provided to
Reuters.
Big Pharma had its first big ICER problem in 2015 when the group recommended to
health insurers that two new drugs to treat high cholesterol should cost about
one-third of the manufacturers’ prices. The analysis prompted insurers to
sharply limit use of the treatments and eventually forced drugmakers Amgen Inc,
Regeneron Pharmaceuticals Inc and Sanofi SA to slash prices. The companies
declined to comment.
Today, the largest U.S. health insurers, such as Cigna Corp and CVS, use ICER
findings to negotiate discounts. New York’s Medicaid program has used ICER to
push drug companies to lower prices, and other states are considering it.
In July, the New York state Medicaid board voted to demand that Biogen Inc sell
its spinal muscular atrophy drug to the state at the ICER-prescribed price of
about $77,000 for a typical year of treatments - an 80% discount off Biogen’s
list price.
Biogen spokeswoman Anna Robinson said that the firm disagreed with the steep
discount and hoped to work with New York to ensure patients get the treatment.
PANDEMIC RAISES THE STAKES
With fewer than 30 employees and a budget of about $6 million in 2018, ICER is
bankrolled mostly by Houston billionaire John Arnold, the former Enron energy
trader and hedge fund owner who has taken on drug-pricing as one of many
philanthropic efforts. ICER also takes money from companies on both sides of the
drug-pricing debate - insurers and pharma - but says that they together provide
only about 20% of its revenue.
Arnold told Reuters in an interview that he finances ICER because past efforts
to foster independent drug-price analysis have been co-opted by the
pharmaceutical industry and tainted by its money.
“The status quo works very well in the industry, so it is important for them to
label any proposed reform as something radical and something that won’t work,”
he said. “There is not much debate about whether the system we have to price
pharmaceutical drugs is broken.”
ICER’s Pearson said the coronavirus pandemic has raised the importance of the
organization’s work as the pricing of vaccines and treatments will impact
millions of Americans amid a faltering economy.
“There is a heightened public awareness and sensitivity to the risk of high
prices being unfair,” he said.
(Reporting by Caroline Humer; Editing by Michele Gershberg and Brian Thevenot)
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