In recent years, several value frameworks, including the Institute for Clinical and Economic Review, have emerged to help payers assess the value of new drugs. These frameworks highlight efforts to adopt some type of informal health technology assessment in the United States. While formal payer adoption of these poses several challenges for payers, there is evidence that payers are incorporating elements of these frameworks as a part of their decision-making. In this article, we will highlight therapy areas in which value frameworks are gaining traction, as well as the areas in which these frameworks will be more challenging to implement. In addition, we will discuss trends that may indicate future payer acceptance of any single value framework.
Value assessments began to take root in the United States in 2013, with 4 major organizations founded solely with the intention of providing value assessments by 2015. These include the National Comprehensive Cancer Network (NCCN),1 the American Society of Clinical Oncology (ASCO),2 Memorial Sloan Kettering Cancer Center (ie, Drug Abacus),3 and the Institute for Clinical and Economic Review (ICER).4 In 2016, another entity, the Innovation and Value Initative (IVI), joined their ranks.5 ASCO, NCCN, and Drug Abacus focus only on oncology products, whereas ICER and IVI have a more holistic view. Each of these organizations has perceived strengths (eg, unbiased, provision of “credit” for novel treatments, etc) and weaknesses (eg, arbitrary thresholds, lack of patient consideration, etc), which are well documented in the literature.6 Payers and decision makers do not solely utilize any of these organizations, but instead tend to gather information from them and integrate it with their own data to develop their position with respect to new market entries—a practice that has also been well established in literature.7,8 Despite this lack of formal adoption, the value frameworks of these entities are, at least partially, serving the role of health technology assessments (HTAs) within the United States. Examples of this include the developing relationship between ICER and Veterans Affairs formulary decision makers, and the impact of ICER’s PCSK9 review on the contracting practices of Sanofi/Regeneron.9,10 All of these organizations continue to evolve their framework tools based on input from the industry, and it is likely that there will be some level of coordination and consolidation as this area and these entities continues to evolve.
In this article, we will consider some of the challenges currently faced by informal HTAs within the United States as well as where those entities may next focus their efforts. Additionally, from the industry perspective, we will discuss how best to work with informal HTAs to ensure that a product receives an appropriate review. Finally, we will discuss how to follow the evolving use of these entities by the payer community to inform industry strategic decision-making.
Challenges to Informal HTAS in the United States
Historically, the United States has lacked a centralized HTA body tasked with assessing a drug within the context of a value framework, and it has been hesitant to adopt any formalized attempts to do so. Due to the lack of historical references, emerging value frameworks have looked to Ex-US, single-payer systems to identify methodological approaches to defining value (eg, The National Institute for Health and Care Excellence’s use of cost-effectiveness). However, the United States’ labyrinth of payer and provider stakeholders creates a unique set of challenges that value frameworks will encounter prior to broad influence and adoption in payer decision-making.
The first challenge in adoption of value frameworks lies in the structure of the US insurance system, which is a complex, multipayer system covering diverse types of patient populations with varying costs and company objectives. The US multipayer system makes it difficult for value frameworks to define and assess the benefit of new therapies in a manner satisfactory to all stakeholders. For example, determining if societal costs associated with not using a particular treatment should be considered as a cost offset becomes a divisive point among stakeholders, as not all of those costs would actually be the responsibility of a subset of the payers. Valuation for drugs that have a durable effect presents similar issues. As an example, a payer with an expectation of maintaining responsibility for a patient over a longer time frame (eg, Centers for Medicare & Medicaid Services, employers) would value certain therapies more than a commercial payer, that is likely to only have responsibility for the patient for perhaps a 2- to 3-year period. Additionally, while pharmacy and medical benefits are becoming increasingly integrated, spending across benefits is still not always viewed together. As a result, organizations that only have a single component of the cost equation may not be receptive to offsets present in other areas.
The second challenge in payer adoption of informal HTAs relates to alignment on the definition of value and the appropriate metrics to quantify value. Using ICER as an example, some regional payers (eg, Blue Shield of California, Blue Cross Blue Shield of Massachusetts, and Harvard Pilgrim) are currently involved in the methodological development. However, among the payer community, there has not been full buy-in to ICER, or any value framework’s use of the quality-adjusted-life-year (QALY) measure. This is due, in part, to the fact that there are still disagreements on the application of QALYs. Determining the appropriate QALY threshold in the United States (eg, should it be $50,000 or $150,000 per QALY) is a significant point of disagreement. Other points of contention include the fact that QALYs are a somewhat blunt tool, incapable of differentiating nuances in outcome, and that patient context matters in that it is potentially more difficult to achieve a QALY in an older patient compared with a younger patient, given that there is less of a timeline to accrue benefit. The lack of alignment on the definition and measurement of “value” is also linked to value frameworks’ lack of transparency in their processes and methods. Payers who are not involved in the methodology development ultimately require the ability to customize model inputs to assess relative value to their plan. Generalized costs incorporated into value frameworks will not necessarily be representative of an individual payer’s true costs. Additionally, different organizations will experience variability across reimbursement dynamics that will affect how a drug’s benefit is valued. For example, community hospitals will often receive different funding than a Center of Excellence (CoE) for the same procedure. Payers will be challenged to translate a single model to their own membership breakdown by channel or disease. For example, a high-cost drug (>$500,000) may be absorbable and “cost-effective” for a large national plan or a pharmacy benefit manager who is not responsible for medical costs but potentially unaffordable for a small, self-insured employer group.
The last challenge that may limit adoption of value frameworks by payers resides in federal and state laws around protected categories and coverage mandates coupled with limited data. The cost vs savings evaluation is the biggest driver in payer interest in utilizing value frameworks. However, for instance, in oncology (a focus area of value vs cost conversations because of the rapidly increasing cost of oncolytics) payers may have a limited ability to apply the results of value research and implement restrictions beyond the label/NCCN guidelines/compendia due to coverage mandates. Furthermore, many oncolytics manufacturers perform pivotal trials vs placebo or older standards of care (SOCs)—which limits payer ability to compare against emerging SOCs or other competitors. Thus, without the support of key opinion leaders or clinical guidelines/compendia, payers have limited ability to implement value frameworks in formulary and access decision-making. As a caveat, given the changes proposed by the Trump Administration in the American Patients First Blueprint,11 these issues may become less relevant or evolve.