In determining drug coverage ICER explicitly limits spending per drug to the IPAB rate of increase. To keep under the cap, ICER has helpfully advised that health plans “prioritize Rx populations to reduce immediate cost impact.”
While IPAB may never meet, ICER’s mission to ‘prioritize’ may be fulfilled elsewhere. It turns out, the VA’s Pharmacy Benefits Management Services office (PBM) is partnering with the Institute for Clinical and Economic Review(ICER) set drug prices and limit veteran access to new medicines.
According to ICER, the VA will use its “drug assessment reports in drug coverage and price negotiations with the pharmaceutical industry.”
Why emulate IPAB when you can directly influence the VA?
In fact, the VA pharmacy benefit program is a match made in HTA heaven for ICER: It already sets prices and restricts access to new medicines. Under federal law, drug companies must the VA a price at least 24 percent lower than the best private sector price. They also must give the VA rebates if prices go up more than inflation.
Excluding some drugs lets the VA get even lower discounts. But such limits come at a great cost to patients. A study by economist Frank Lichtenberg found that not only were 20 percent of drugs approved since 2000 covered by the VA and that the limited access was associated with lower life expectancy over age 65 compared to Medicare. The innovation gap has grown since then.
A recent Avalere study found that "The VA National Formulary covers 54 percent of drugs on the California public employee retiree plan formulary, including 46 percent of brand drugs (102 of 222) and 61 percent of generic drugs (174 of 287.) " And it covers 50 percent few medicines than most state Medicaid plans.
ICER will only make the denial of timely, effective treatment worse, if that’s possible. In the past, ICER reports have been used to limit access to cures for hepatitis C, drugs that reduce the risk of heart attacks and a wide variety of medicines for people with rare cancers. ICER’s estimate of the value of medicine is so low that many of the drugs used to treat HIV would have been rejected by the group.
ICER’s involvement in VA drug selection will increase the damage being done by the department’s rationing of new medicines.
As an example of ICER’s impact on veterans, let’s assume a more effective treatment for post-traumatic stress disorder (PTSD) is developed. About 103000 veterans are diagnosed with PTSD. Only a third seek care. And those that do often stop treatment.
ICER’s asserts that on average a new drug should not cost a health plan more than $50K per QALY. VA standard of care for someone with PTSD costs $10000 over four years and includes the use of antidepressants, therapy and some hospitalization. Presently, such treatments leads to complete remission in only 18 percent of veterans who seek care. A better drug could reduce hospitalization but increase per patient and total treatment costs. More patients who previously didn’t respond or had never been treated will be likely seek out care if an effective treatment was available. There might be fewer suicides too. So ICER punishes the use of new products that, because they work, also let people live longer and get more care.
Meanwhile, ICER ignores the value (and savings) of reducing non–mental health related medical costs, caregiver burden, strain on family relationships, domestic violence, substance abuse, crime, and homelessness. In fact, a dead or untreated patient is a cost-effective one.
Even if the drug was used, ICER will limit the number of veterans getting treatment. For the US as the whole, ICER’s cap is $915 million per drug per year. For VA health budget, the ICER cap would be $5.52 million per each new drug. At $10000 per patient the VA would have to limit access to the new PTSD drug to 551 veterans a year.
I have not seen any independent confirmation from the VA that ICER has a formal role in designing drug coverage. If so, veterans are in danger.