ICER’s Growing Influence on Payer Decision Making: The Impact of ICER Assessments on Market Dynamics and Patient Access
By Xcenda |
HTA QUARTERLY | WINTER 2020
ICER’s Growing Influence on Payer Decision Making: The Impact of ICER Assessments on Market Dynamics and Patient Access
Updated September 17, 2020
In recent years, the emergence of innovative drugs in therapeutic areas with high unmet need has been coupled with higher launch prices. In the United States (US) specifically, drug spending increased by $507.9 billion between 2018 and 2019, which was largely driven by growth in specialty and oncology therapies. Some have viewed the rising list prices of brand name drugs and increased cost-sharing to be an emerging impediment to Americans’ financial security and healthcare. As such, the value of new therapies has become an increasingly important point of consideration for payers when deciding formulary coverage. The Institute for Clinical and Economic Review (ICER), an independent health technology assessment organization that evaluates the cost-effectiveness of healthcare interventions, has become progressively more influential among US payers over the past 5 years. A 2018 study conducted by Xcenda found that 78% of payers stated that ICER recommendations influenced their coverage decisions, which was up from 49% in 2016. As ICER reports have become more influential, criticism has also increased around ICER’s methods, including its use of cost-effectiveness thresholds, which have been associated with access barriers to physician-administered therapies. The purpose of this article is to explore the potential downstream effects of ICER assessments on market dynamics and patient access, focusing on two ICER evaluations that garnered widespread media attention, and describe the subsequent shifts in drug pricing and coverage.
How ICER Influenced PCSK9 Inhibitors Pricing and Coverage
Proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitors provide a novel, targeted approach to managing and preventing cardiovascular disease, a health condition that has a well-established standard of care with statins and other relatively low-cost medications. When the PCSK9 inhibitors alirocumab and evolocumab first launched in 2015, their annual list prices were $14,600 and $14,100, respectively, far exceeding the costs that payers were accustomed to seeing for lipid-lowering agents. Due to their comparatively higher cost and the relatively large population of patients with high cholesterol who may be eligible to receive these drugs, initial payer coverage for PCSK9 inhibitors was limited, with many insurers requiring strict prior authorization criteria and high copays. One study found that in the year after the PCSK9 inhibitors were launched, less than half of the pharmacy claims for PCSK9 inhibitors were approved by their insurance. The high cost of these drugs was further emphasized when ICER published its first evaluation of PCSK9 inhibitors in November 2015, reporting a value-based price benchmark of $2,177 for both PCSK9 inhibitors and indicating that an 85% price discount would be necessary for alirocumab and evolocumab to be considered cost-effective. In subsequent years, ICER conducted multiple reassessments of PCSK9 inhibitors as new clinical trial data emerged, shifting the value-based benchmark prices for alirocumab and evolocumab in accordance with their respective cardiovascular mortality data (Figure 1). ICER’s evaluation of PCSK9 inhibitors generated interest among payers in both private and public sectors, resulting in some ICER-payer partnerships that led to formulary exclusions of these therapies and “price wars” as manufacturers of alirocumab and evolocumab drastically lowered their list prices to remain competitive.
Figure 1. Timeline of ICER’s Evaluation of PCSK9 Inhibitors
Department of Veterans Affairs (VA) Collaboration with ICER on PCSK9 Inhibitors Results in Alirocumab Formulary Preference
In 2017, the VA entered into a partnership with ICER to enhance the VA’s capabilities for integrating ICER’s cost-effectiveness analyses into the VA’s evidence review processes. This collaboration consisted of monthly meetings between the VA pharmacy staff and ICER staff to discuss medication classes that are relevant to the VA’s population. The VA considered ICER’s recommendations as one component of their clinical review and used ICER’s updated 2017 assessment of evolocumab, along with their own clinical assessments, to ultimately favor alirocumab on its formulary.
Express Scripts and Regeneron/Sanofi Use ICER’s Recommendations as Basis for Negotiations for PCSK9 Inhibitors
In 2018, Express Scripts entered into an agreement with Regeneron and Sanofi, in which Express Scripts would pay a net price for alirocumab that is consistent with ICER’s value-based price benchmark in return for having alirocumab as the exclusive PCSK9 inhibitor on Express Script’s formulary. Additionally, as part of this agreement, Express Scripts simplified the process for physicians to prescribe alirocumab for appropriate patients. Rather than requiring lab reports and documentation on prior drug history, Express Scripts will only require physician’s attestation that patients meet the FDA-approved indication for alirocumab and have a history of having elevated LDL-C despite taking maximally tolerated statins. Express Scripts also agreed to share a portion of the cost savings with patients who are prescribed alirocumab, thereby lowering many access barriers.
ICER’s Evaluation of Medications for an Ultra-Rare Disease
As of July 2020, Sprinraza and Zolgensma were the only two drugs that were FDA approved for the treatment of spinal muscular atrophy (SMA), an ultra-rare genetic disease associated with progressive muscle function decline and mortality. Both Spinraza and Zolgensma are innovative molecule types with novel mechanisms of action that provided treatment options in a disease area with a high unmet need. As with most drugs that target orphan (and especially ultra-rare) diseases, both launched at extremely high list prices, with Zolgensma being called “the most expensive drug in the world.” While cost-effectiveness analyses are useful across all therapeutic areas and help payers understand whether the monetary investment is proportional to the resulting clinical outcomes, economic considerations are especially important for high-cost therapies, like Spinraza and Zolgensma, in the context of budgetary constraints and affordability. ICER published its final recommendations on SMA therapies in 2019, stating that in order to meet the cost-effectiveness threshold of up to $150,000 per life year gained, Spinraza would need to be priced at a maximum of $145,000 for the first year of treatment and $72,000 annually for subsequent years, which was considerably lower than Spinraza’s list price of $750,000 for the first year and $375,000 annually for subsequent years. ICER also recommended that Zolgensma could be priced at up to $2.1 million per treatment to be considered cost-effective, which was in line with its list price of $2.125 million at launch.
Interestingly, although ICER’s analysis found that Zolgensma was cost-effective while Spinraza was not, payer coverage for both drugs followed a similar trend over time, with payers restricting access in the initial periods immediately after launch and later relaxing these criteria. This shift in coverage criteria is likely due to an initial reflex for payers to restrict access to extremely expensive medications, followed by loosening criteria after acknowledging the dramatic clinical benefits that Spinraza and Zolgensma have shown in clinical trials for treating a disease with no other therapeutic options.
Spinraza’s List Price and Subsequent Payer Coverage
When Spinraza was first approved in 2016, multiple commercial payers restricted coverage of Spinraza to those patients with the most severe form of SMA, despite Spinraza being FDA approved for all SMA types (Table 1). These coverage criteria have since been changed to align more with the FDA-approved indication for Spinraza. Although ICER’s 2019 assessment of SMA therapies (which concluded that Spinraza was not cost-effective) was published after payers expanded coverage for Spinraza, the manufacturer of Spinraza did not lower its list prices. In fact, ICER acknowledged that Spinraza displayed strong clinical efficacy and that payers will likely cover the SMA therapies despite their high list prices. Accordingly, payers loosened restrictions, which allowed for more SMA patients to be treated with Spinraza.
Table 1. Comparing 2017 and 2020 Payer Coverage of Spinraza
ICER’s SMA Evaluation May Have Eased Payer Restrictions for Zolgensma
Zolgensma faced similar challenges as Spinraza during their initial launch period when multiple payers created coverage criteria that were more restrictive than Zolgensma’s label. These decisions were made despite Zolgensma being priced within the upper range of ICER’s cost-effectiveness threshold. According to a study conducted by the investment firm Bernstein, which surveyed 11 payers on their early coverage decisions for Zolgensma, 9 payers did not provide coverage of Zolgensma for patients who were receiving concurrent treatment with Spinraza, and 4 payers did not provide coverage in presymptomatic SMA patients in the months after Zolgensma launched, even though these restrictions were not a part of the FDA’s label. However, by the end of 2019, the manufacturer of Zolgensma stated that coverage was in place for 90% of eligible patients on commercial plans, indicating that early resistance from payers had subsided and that ICER’s analysis may have been used to ease payer restrictions.
While there is a consistent trend in the increased use of ICER evaluations in payer decision making, the downstream impact of ICER assessments on pricing and market access differ widely across therapeutic areas and individual drugs. In the case of cardiovascular disease, which is a competitive market with an established standard of care that includes multiple therapeutic options, payers were able to leverage ICER assessments in negotiations with manufacturers who ultimately lowered their list prices. The impact of ICER evaluations in SMA was associated with a different turn of events. For a therapeutic area characterized by low prevalence, high mortality rates, and lack of effective treatments, ICER’s cost-effectiveness analysis either did not influence payer coverage (as with Spinraza) or could have been leveraged by the manufacturer to push for wider acceptance among payers (as with Zolgensma).
Consequently, evaluating the association between ICER’s evaluations and payer coverage decisions, and subsequently patient access, is limited by the use of publicly available information which may not capture all the nuances and shifts in market dynamics, including confidential rebates and discounts. Nonetheless, it is apparent that ICER’s cost-effectiveness assessments are regularly brought up in conversations about pricing and coverage, and may play, at minimum, an indirect role in patient access.
It is important for manufacturers to understand how payers and other stakeholders are using ICER evaluations and the impact that ICER recommendations may have on market access. Many stakeholders, including clinicians and patient advocacy groups, are heavily involved in the ICER review process to ensure that ICER evaluations capture all relevant aspects of a drug’s benefit and risk profile with the understanding that these reports may influence patient access down the line. Early and proactive engagement in ICER’s evaluation process is therefore imperative for manufacturers, as ICER’s reports are sources that payers consistently refer to for guidance on formulary decision making and drug pricing negotiations.
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