Wired magazine’s article, “The New War on Overpriced Drugs” celebrates Steve Pearson and his Institute for Clinical and Economic Research for applying evidence-based science to drug prices. In doing so, it makes it quite clear that Pearson believes the perfecting the require fewer people benefitting from medical innovation.
The author, David Ferry claims that “ICER and Pearson’s method has successfully checked the prices of a handful of drugs—something very few people can say they’ve done.”
It is more accurate to say that ICER successfully legitimized and justified PBMS from restricting access to new medicines, maximizing rebates and imposing cost sharing requirements on the sickest 2 percent of patients.
Ferry gives ICER credit when “Gilead took 46 percent off the list price for Sovaldi and Harvoni. (Two of the first medicines for hepatitis C.) The price drop was stunning. Steve Miller, the chief medical officer of Express Scripts, the largest of the middleman firms that buy drugs wholesale for insurance companies, said ICER’s work had given him the ammo he needed to negotiate with Gilead. Overnight, the tiny nonprofit became an implausible power player in the national conversation about drug pricing.”
In fact, ICER’s contribution was proposing a rationing of new medicines and generating a huge rebate windfall for Express Scripts and the other large PBMs. It was ICER that recommended restricting access to such drugs until they livers start to fail, an approach that has been ruled illegal by a federal district court and has been under challenge in many states.
And rather than making medicines affordable, ICER’s pricing scheme allows PBM’s to pocket rebates and share them with health plans instead of directly reducing patient drug costs. Indeed, many plans require HCV patients to pay up to 30 percent of the list price of the drug. ICER has ignored this arbitrage as well as the impact it has on access to new medicines.
The claims that ICER informed policies protect people from overpriced drugs is factually bankrupt. “Recent data released by Trio Health show that the prevalence of hepatitis C drug patients diagnosed with Hepatitis C but not started on curative drugs, such as Harvoni and Zepatier, more than tripled between 2014 and 2016—signaling that payers continue to deny coverage despite increased marketplace competition and availability of discounts.”[2]
The same can be said for ICER’s claim that new biologics – PCSK9 inhibitors - that help patients who have dangerously high LDL levels and who can’t take or don’t respond to current statins are not cost effective.
Nearly 11 million people have cholesterol levels that if reduced by 50 percent of more, would see a significant reduction in risk of a heart attack or stroke. Each year, 1.5 million people have a heart attack or stroke and are at greater risk for a subsequent attack or death.
A study looking at the impact of primary prevention in the 11 million or so patients estimated the cumulative value of PCSK9 inhibitors “would range from $3.4 trillion to $5.1 trillion (1.9-2.8 million deaths averted), or $12,000 to $17,000 per patient-year of treatment between 2015 and 2035.[3]
But so far less than 5 percent of all patients who could reduce their risk of early death with the new medicines get them.
Ferry mentions a meeting that I participated in prior to ICER’s discussion about the value of new medicines for multiple myeloma. He claims ICER determined that four of the newly approved myeloma drugs indeed work, but they’re all dramatically overpriced and don’t represent "high value.” Pharma is overcharging cancer patients for their lifesaving meds, the quants found.
Interestingly, while he took the time for a pathetic attempt to smear me (The Center for Medicine in the Public Interest takes money from Big Pharma) he never took the time to pick up the phone and ask me questions.
He obviously didn’t read my white paper on the impact of ICER’s methodology on patients with myeloma. I barely mention funding and I never challenge ICER’s methodology, only the way it arrives as the estimate of patients who could benefit from new medicines. (I need a whole other blog to discuss how ICER just chooses thresholds out of thin air, and then refuses to disclose that there is no empiric basis for them, or how they manipulate data to justify pre-ordained conclusions.)
Rather, I use ICER’s own analysis to determine how many people would be denied drugs that Ferry claims are (according to ICER) not worth using at current prices.
As I noted: “The difference in QALY can be debated by people of differing perspectives. But the impact of the ICER restrictions on access to new medicines, even at very low prices, is straightforward.”
I used ICER's budget cut-off of $915 million per new drug per year necessary to protect the health system and then determined how many people with myeloma would not get treatment, even at discounted prices, at the level of spending
Under ICER assumptions, people with myeloma that would be denied new medicines would lose 43833 life years. The death of 44,000 people with myeloma will also have a profound economic impact, costing society and myeloma patients nearly $12. 2 billion worth of additional life (at $300K per life year gained).
Ferry trots out a cancer survivor who claims “patients opposing ICER have been bamboozled, she says, tricked by Big Pharma into becoming pawns in the industry’s fight to control its pricing power. “
In fact, PBMs and insurers generate about These practices are applied to almost every patient with conditions needing specialty drugs and rarely applied to everyone else. Nearly every ACA and Medicare drug plan put specialty medicines on the highest cost-sharing tier. Half of all drug coverage provided to employer-sponsored health plans impose the same burden only on the two percent.[4]
As a result, people who use specialty medicines are 10 times more likely to pay full price for the most expensive medicine. On average, they are 10 times more likely to pay over $2500 out of pocket for medicines than other consumers. [5]
In addition, the 2 percent (4.4 million people) generated $13 billion in rebates and $12 billion in out of pocket spending that goes straight to PBMs and insurers.
PBMs and health plans could use rebates to reduce cost sharing. Instead, they systematically maximize their use for the sickest patients. They do it because they can and because by doing it, they rake in tens of billions of dollars in a predictable manner. Who is bamboozling who?
Pearson justifies all this by claiming that “Health is a very important—perhaps the most important goal for us as individuals, and for our society,” Pearson says. “But it’s not the only goal. We also want good jobs, great schools, a safe environment.”
The money you spend on overpriced drugs, he argues, is money that doesn’t go to your kid’s school or the ambulance driver or fire department. “There are choices within the health care system: Should we get this machine or pay another doctor?” he says. “Then, step back and it’s: Another hospital or 10,000 more teachers?”
Pearson thereby exposes the moral and intellectual shortcomings of ICER. He truly believes, like many professional pessimists that resources are scarce and that spending more and more on medicines will ultimately come at the expense of pothole repair or more police or a perfect world.
It never occurs to Pearson that spending on new medicines makes government investment in public services sustainable. If more people live longer healthier lives, they pay taxes, spend money on insurance premiums and other activities. In Louisiana for instance, the death rate from heart disease is 75 percent higher than the national average. In some parishes, it’s four times higher. A lot of those people who will die could reduce that risk with the new medicines ICER claims aren’t worth paying for.
As a result, Pearson’s calculus and ICERs recommendation would make America sicker, less prosperous nation.
In fact, if ICER’s combination of QALY based prices and budget caps are applied to all new medicines since 1990 for heart disease, psoriasis, HIV, multiple sclerosis, various cancers and drugs for rare diseases, none would be considered cost effective.
Pearson is not unaware of the impact his approach would have on patient access. Instead, he is betting on it. And while many patient groups and drug companies think ICER is open to change, such adjustments are rhetorical. ICER now uses estimates of rebated prices. But ICER and Pearson are still silent about rebate and copay rip-offs not because he gets money from PBMs and health plans but because he sees them as necessary to increase his influence over how much we spend on drugs as well as the pace at which new medicines are used. To avoid criticisms like mine, ICER no longer spells out how many people would be denied care. But budget thresholds are still there.
Ferry notes that Pearson believes that what ICER does has “a nobility and a grandeur.”
He’s right. Pearson is a true believer in the Progressive tradition. As Princeton University history professor Thomas C. Leonard, notes in his 2016 book “Illiberal Reformers: Race, Eugenics & American Economics in the Progressive Era,” progressives believed that scientific experts should be in society’s saddle, determining the “human hierarchy” and appropriate social policies” to achieve a better world[6] And it obvious that most progressives of any era, Pearson has" an extravagant faith in science and the state with an outsized confidence in their own expertise.”[1]To Pearson, the greater good will be achieved by reducing the use of new medicines. As he notes: “The opportunity cost of supporting the use of ultra-orphan drugs necessitates that patients with a more common disease, for which a cost-effective treatment is available, are denied treatment.” His solution: restrain “society’s desire to help those weakest among us, especially when their small numbers allow us to see them as unique individuals.” In that way, we can “ensure that an undue burden is not placed on others for the sake of a few.” [7]
As Leonard notes, progressives were all in on eugenics. The saw eugenics as a scientific tool that could be used to eliminate people of limited or undesirable traits who, because of their disabilities and behavior, are a drain on other spending. So, they set about establishing which of us should reproduce based on the traits they decided were most desirable. The eugenics leaders relied upon foundation funding to advance their vision and to support randomized trials and statistical models to demonstrate how the greater good would be served.
All ICER is doing is applying the Progressive's eugenics calculus to restrict the medicines the sickest people – including those with genetic disorders – that siphon spending away from schools and highway construction, etc., instead of eliminating the people themselves. PBMs and health plans benefit from rich rebates in the short run and – by imposing cost sharing on the sickest – discourage them from sticking around for the long term. Indeed, as I suggested, Pearson has figured out that PBMs are the perfect mechanism for sorting out the undesirables from those of us who young, lean, healthy and who, like Ferry, want to spend their free time “enjoying sandwiches.”
There is nothing evil about Pearson or ICER. Rather, as Lionel Trilling observed, “some paradox of our natures leads us when once we have made our fellow men the objects of our enlightened interest, to go on to make them the objects of our pity, then of our wisdom, ultimately of our coercion.” For Pearson and his acolytes in Wired, that coercion is noble and grand.
[1] ILLIBERAL REFORMERS Race, Eugenics and American Economics in the Progressive Era
By Thomas C. Leonard 250 pp. Princeton University Press
[2] http://www.managedhealthcareconnect.com/content/hepatitis-c-treatment-coverage-denials-increase-sharply
[3] Am J Manag Care. 2016 Jun 1;22(6):e199-207.
Value of improved lipid control in patients at high risk for adverse cardiac events.
Jena AB1, Blumenthal DM, Stevens W, Chou JW, Ton TG, Goldman DP.
[4] 2016 Employer Health Benefits Survey Sep 14, 2016
“Among covered workers at large firms whose largest plan has a separate tier for specialty drugs, 43% have a copayment for specialty drugs and 46% have a coinsurance requirement (Exhibit 9.15). The average copayment is $89 and the average coinsurance rate is 26% (Exhibit 9.16). Seventy-eight percent of those with a coinsurance requirement have a maximum dollar limit on the amount of coinsurance they must pay.”
[5] Source: Medicines Use and Spending in the U.S.: A Review of 2016 and Outlook to 2021, Quintiles IMS Institute May 2017
[6] “The Liberals Who Loved Eugenics.” http://wapo.st/2rrKWSj
[7] Largent EA, Pearson SD. Which orphans will find a home? The rule of rescue in resource allocation for rare diseases. The Hastings Center report. 2012;42(1):27-34.
