A Comparison of Value-Based and Net Prices Using Institute for Clinical and Economic Review Reports

The United States Government is the largest biopharmaceuticals customer in the world. Medicare alone pays for more prescription drugs than Japan, Germany and the U.K. combined. However, unlike most other nations, the U.S. has no formal Health-technology-Assessment (HTA) agency.

In the absence of a national body, the Institute for Clinical and Economic Review (ICER) has emerged as a leading voice in evaluating emerging technologies on their clinical and economic value. However, given that there is no mandate to base pricing and coverage decisions on ICER assessments, what exactly is the organization’s impact?

A new study via ISPOR reviewed a total of 34 ICER final reports from November 2007 to October 2020, comparing ICER-estimated value-based prices (VBP) with 'net' price on the market for 95 drugs across 35 indications. As part of their evaluation, ICER estimates value-based prices at $50 000 to $150 000 per quality-adjusted life-year (QALY) gained thresholds.

The net price of 81% of drugs exceeded the $100 000 per QALY VBP and 71% exceeded the $150 000 per QALY VBP. Half of drugs needed at least a 36% reduction in net price to be considered cost-effective at the $150 000 per QALY threshold.

Net prices of drugs in the U.S. are poorly aligned with ICER's value frame-work. While the American health system certainly enables quicker access to new therapeutics, it leaves questions about value to the market. And as many U.S. lawmakers look at reforms to the U.S. pharmaceutical system, the Biden administration will certainly need to look beyond ICER for evaluating drug prices and therapies.