Two new studies issued in the last two weeks outline the ill effects of drug-pricing proposals being discussed in state capitals and in Washington, D.C.
The first, from the American Consumer Institute’s (ACI) Center for Citizen Research, explains the International Pricing Index (IPI) will harm consumers, pharmaceutical research, economic and employment growth, and the United States’ reputation for innovation. (Late last month, the U.S. Department of Health and Human Services sent its regulation implementing the IPI for Medicare to the White House for review.)
The most profound impact would be on consumers’ access to life-improving and saving medications. The study notes that, of all new medicines launched worldwide between 2011 and 2018, consumers in the United States had access to nearly 90 percent of them. In countries that under the IPI would serve as benchmarks for U.S. drug prices, consumers had access to only 47 percent of new drugs on average. And when consumers in these nations did have access, the drugs came onto the market about a year later, on average.
The ACI also argues adoption of the IPI will reduce the capital available to American firms to innovate. Unsurprisingly, U.S. consumers put a premium on the country’s ability to develop new cures. A recent ACI survey, for example, found 94 percent of Americans believe “U.S. leadership in inventing and producing life-saving medicines is important.” We are the land of the free, the home of the brave—and a place where ingenuity can flourish.
The ACI concludes, “Price controls have never worked, because they lead in the short run to shortages and in the long run to decreased innovation.”
We also agree with the findings of a recent Pioneer Institute report that examined the Quality Adjusted Life Years (QALY) approach to drug value assessment, particularly as it has been deployed by the Institute for Clinical and Economic Research, or ICER. (Learn more about ICER and its funders here.)
Pioneer concludes ICER value assessments are “particularly ill-suited to assess the cost-effectiveness of orphan and rare disease treatments, which represent a rapidly growing sector of the biopharmaceutical marketplace.” It also concludes “ICER is unfit to evaluate the cost-effectiveness of rare disease treatments.”
But don’t just take Pioneer’s word for it. The report notes that, just two short years ago, ICER raised doubts about its ability to effectively quantify the benefits of cutting-edge treatments for many rare diseases. In a 2017 press release, Pioneer explains, “ICER acknowledged the unique challenges inherent in evaluating the growing number of drugs for complex diseases for smaller patient populations.” ICER was trying to devise a revised framework for these drugs that took into account “the distinctive practical and ethical challenges associated with potential major advances for serious ultra-rare conditions.”
In essence, ICER conceded its “model was failing to capture the value society attaches to therapies to treat rare diseases.”
ICER, unfortunately, has done little to improve its methodology. But that has not stopped the group from exercising its influence in the rare disease space.
One suggestion stakeholders have made is that ICER raise its QALY thresholds for orphan or rare disease drugs. Pioneer explains, “ICER has refused to take this step as, one might surmise, revising the thresholds based upon certain important contextual factors would open up the entire ICER methodology to the question of why certain key contextual issues for different disease states and patient populations are not built into the model.”
That refusal is certainly something state lawmakers should consider since “ICER’s ambition is therefore to have state Medicaid programs and commercial plans employ their reviews when making coverage decisions.”