Value Frameworks like ICER help evaluate appropriate drug pricing when sky is the limit

The International Society of Pharmacoeconomic and Outcomes Research (ISPOR), the Professional Society for Health Economics and Outcomes Research, recently published in its June issue of Value in Health a supplement summarizing presentations from the ISPOR Summit 2018. Prime’s Patrick Gleason, PharmD, and assistant vice president of health outcomes, co-authored two of the journal articles and was the only PBM industry representative who served as a panelist at last fall’s summit.

The first article Gleason co-authored, titled “Current Value Frameworks – What’s New,” reviewed current leading value frameworks and how they inform health care pricing decisions. A value framework is a method to assess the value of new medicines, based on attributes such as cost, quality of life, and effectiveness. At the ISPOR Summit 2018, Dr. Gleason provided insight into how Prime uses the Institute for Clinical and Economic Research (ICER) value framework model as one input to inform coverage decisions and pricing negotiations to sustain high quality care for members. ICER is an organization that assesses the value for money of a drug, measured in quality-adjusted life years (QALY), recommending how drugs should be priced to obtain the long-term patient outcomes at a given QALY investment price threshold, e.g., $50,000 per year drug cost investment to gain one QALY.

When evaluating new drug treatments, Prime’s approach is to always first evaluate the treatment for safety and effectiveness. Once a drug passes that threshold, Prime uses a value framework to evaluate the cost-benefit of the treatment. Prime’s own value framework considers two primary factors in recommending access to a given treatment: 1) the treatment’s long-term value for money, and 2) its short-term pharmacy spend. Prime’s ability to forecast future drug utilization and spend for newly approved treatments is supported by integrated medical and pharmacy data analytics. This complete picture helps clients prepare for the costs many new to market drugs bring with them.

To help close price-to-value gaps identified using these value framework inputs, Prime analyzes the real-world data from its more than 20 million members integrated medical and pharmacy claims to gain insights into how drugs are used in the real world, the actual costs of those drugs and the medical costs associated with conditions for which the drugs are being used. In addition, Prime assess drug adherence/persistency and the actual rates of medical resource avoided (e.g., hospitalizations) from drug therapy. These real-world findings are compared to the manufacturers published studies and then Prime engages manufacturers in value-based contracts to ensure the drug outcomes are meeting the manufacturer reported study benefit expectations. Contracts vary depending on whether a therapy is curative or a chronic/lifetime treatment.

“First and foremost, Prime keeps the member at the center of all we do. Drug prices affect not only those who take them but also premiums for all insured individuals,” said Dr. Gleason. “Therefore, it’s in the best interest of our clients and their members to leverage value frameworks and work with manufacturers to create better agreements that align the price of a drug to its value. Value frameworks and value based contracting can lead to programs where there’s more health care improvement for the investment.”

The second article, titled “Practical Next Steps in Improving Value Measurement and Use,” examined ways to improve upon current value frameworks. Dr. Gleason noted that value framework researchers should focus most intently on patient-reported outcomes to better inform insurance coverage decisions. Dr. Gleason also discussed the need to address the short- and long-term safety and effectiveness risks for new products within value framework reporting. He added that stakeholders need to be positively engaged in the value framework assessment process and encourage value framework adoption by policy makers to help ensure greater access and affordability of health care technology advancements.

According to ISPOR, Value in Health is the official journal of ISPOR and provides a forum for researchers, healthcare decision makers, and policy makers to apply health economics and outcomes research into healthcare decisions. The goal of Value in Health is to advance scholarly and public dialogue about the assessment of value in health and healthcare.