Pulse on Pricing: IPI Insights
By Randi Kahn and Michelle Leeds
This week we got a glimpse into the Trump administration’s latest thinking on reference pricing. Secretary of Health and Human Services, Alex Azar, said the agency will revise its International Pricing Index policy to be more aggressive. Recall readers, the initial IPI proposal aimed to reduce drug prices by tying payments for Medicare Part B drugs to the average of drug prices paid by other developed countries. Revisions now aim to deliver President Trump’s goal of getting the “best deal” for America by pushing for “most favored nation status.”
Another revelation from Azar: this policy will be proposed as a regulation from HHS, and not as an executive order, as President Trump had indicated in public statements last July. Taking that avenue means a longer road ahead for implementing the anxiously anticipated regulations, which will require a public comment period. It will also give the policy more permanence as Executive orders can be overturned by new administrations.
What’s next? The timing on the regulation is still vague. The Office of Management and Budget has been reviewing an IPI policy since June, but it is unclear if what’s in their inbox is the current version. The administration could also be waiting to see if Congress will be able to pass drug pricing legislation this year before considering more aggressive steps via executive action.
Meanwhile on Capitol Hill, two bills were blocked in the Senate that would have required price transparency in advertising as well as patent reforms. Democratic presidential candidates Senators Bernie Sanders and Corey Booker teamed up on a new proposal to create a bureau that would review drug costs and price increases. Under the bill, drug makers would have to submit: their costs of research and development, the amount of government investment that contributed to the development, and the product’s US price, along with the prices charged in 11 countries with market controls.
How much is a Cure Worth?
By Ché Knight and Miriam Kalnicki
With more than 20 gene therapies in Phase III, the Institute for Clinical and Economic Review (ICER) released a set of adaptations to their methodology for evaluating the value of “high impact, single short-term transformative therapies” (SSTs).
So how will ICER reconcile the tug-of-war between the promise and uncertainty in valuing potential cures? Well, we got the start of an answer. Check out ICER’s five adaptations to their value assessment framework for SSTs, which was developed in close collaboration with England’s National Institute for Health and Care Excellence (NICE) and the Canadian Agency for Drugs and Technologies in Health (CADTH).
- Defining what qualifies as an SST: Simply put, ICER defines SSTs as therapies delivered through a single intervention or short-term course of treatment (less than one year) and offer substantial or sustained benefits (i.e., potentially curative, produce major health gains, or halt the progression of significant illnesses).
- Addressing uncertainty and potential benefit: ICER will use different models to account for the potentially curative impact of SSTs by introducing both optimistic and conservative scenarios to determine a possible range of treatment benefit. It will create a dedicated section of its reviews to expand discussion around uncertainties and controversies. This section may include a discussion on the number of years a treatment will need to be sustained to reach cost-effectiveness thresholds (think on it as an ROI measure of sorts) and commentary around the uncertainties of the modeling.
- Additional domains of “value” added to ALL ICER reviews (not just SSTs): To consider benefits and disadvantages of new treatment options, an independent appraisal committee will vote to determine value based on three new metrics. These include the therapy’s potential: 1) advantages versus risks, 2) ability to increase access to future treatments, and 3) risk of precluding future treatments, if it is unsuccessful (imagine a scenario in which a gene therapy doesn’t work and a patient couldn’t take another intervention).
- ICER will apply the 3% discount to both health outcomes and costs: ICER isn’t changing its reference case applying the standard discount rate to all drugs, including SSTs.
- Hypothetical “shared savings” scenarios to model cost-offsets: If curative, SSTs may hold great potential to “bend the healthcare cost curve” by offsetting traditional costs of care. And, ICER is putting two scenarios in place to model these potential cost offsets. The first scenario will model 50% of the lifetime health system cost offsets back to the health system (insurers). The second scenario will assign cost offsets entirely to the new treatment, but cap them at $150,000 per year. Both scenarios could potentially undervalue the long-term savings and value of new treatments.
Much of the adapted methodology – including whether to use the adapted framework in the first place -- points to the need for increased engagement from manufacturers. Developers who are working on candidates beyond gene therapies and CAR-Ts, should pay attention to the new “domains of value.” These are what ICER is calling “the value of choice among treatments”, the value of options to additional treatment, and the benefit/disadvantage of not being able to receive additional treatment if the therapy is unsuccessful (as is a concern in some potential therapies).
The new methodology also raises the profile of discussions on health system cost-offsets, which have traditionally been a less visible part of the public discourse on drug pricing. Manufacturers will need to refine and clearly delineate how they differentiate against alternative treatment options with health economics arguments at the ready.
Who wrote this? The managing editor of TWTW is Randi Kahn, who desperately wants llama therapy. Syneos Health Communications' Reputation & Risk Management Practice is a team of healthcare communications consultants, policy-shapers and crisis response specialists. We provide unique solutions to the evolving communications challenges in today’s healthcare industry, using evidence-based approaches to help our clients successfully navigate the most sensitive of situations.
Got thoughts? Contact Randi
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