A New Threat to Big Pharma

A small, obscure research firm, The Institute for Clinical and Economic Review (ICER), may be the biggest new threat to Big Pharma to date. ICER researches and evaluates medications and then reports on whether effectiveness matches price.

Already New York’s Medicaid program is using ICER research to negotiate price cuts with Big Pharma. The question is, can ICER help eliminate price gouging by the drug industry? Or will ICER’s effectiveness be co-opted and undercut by Big Pharma’s attempts to underwrite its activities?

Bad Medicine for Big Bucks

Big Pharma often claims that high drug prices are necessary to recover the high cost of research and development. The longer it takes to develop a medication, the higher the price, or so goes the explanation. However, some of the most expensive new medications are the least effective.

Cancer drugs are some of the worst offenders. Seventy-one of the most expensive new cancer drugs have been shown in clinical trials to prolong a patient’s life a mere 2.1 months. What’s more, although most of these drugs are prescribed for seniors, the clinical trials are done on people in their 30s and 40s, which means that 2.1 month median number of additional life might not even be accurate.

Just how expensive are ineffective drugs? In the case of cancer, a one year treatment on just about any single cancer drug starts at around $100,000, and that includes the drugs that are for all practical purposes almost completely ineffective. But rarely does a patient go on only one cancer drug.

Where is the Federal Drug Administration on regulating prices of ineffective drugs?

The FDA approved only 33% of all new drug applications in 2008, eliminating ineffective drugs from approval. In 2018, the same year Congress blocked Medicaid’s ability to negotiate drug prices, the FDA approved 96% of all new drug applications.

The FDA appears to have been co-opted by Big Pharma.

How ICER Reveals the High Price of Bad Drugs

ICER looks at the value of a given drug to the patient being treated, considering factors like how quickly the drug provides relief, how quickly the patient is able to return to work after taking it, how many years it can add to a patient’s life, and whether the drug creates fewer negative side effects for the patient than a competitor’s drug.

In 2018, ICER validated pricing on 7 out of the 11 drugs it studied, but in past years the organization has publicly revealed the ineffectiveness of some of the most high-priced new drugs on the market.

Understandably, Big Pharma does not appreciate ICER’s ability to undercut their pricing when the cost of a new drug does not align with outcomes and has vigorously lobbied against ICER’s research being used to determine drug pricing.

In Europe, research organizations like the National Institute for Health and Care Excellence (or, NICE), are routinely used to set limits on the prices of drugs. Big Pharma wants to set its own prices, using free market models and leaving the weight of the consideration of drug effectiveness to the consumer.

When any single drug that might help a person through a deadly disease like cancer costs in excess of $100,000, placing the responsibility for evaluating the effectiveness of that drug relative to pricing seems cruel and also beside the point. If a cancer point can’t afford any of the drugs on offer, what difference does it make which ones work and which ones don’t?

Because ICER is able to cut through some of these tangles with actual research and recommendations, it remains one of Big Pharma’s biggest new threats.

Insurance Companies Drop Over 90 Drugs in 2019 to Fight Price Gouging

In response to price gouging by Big Pharma and using some of the information from ICER, health insurance companies will be dropping over 90 drugs from coverage in 2019. Retail pharmacy giants like CVS, Care Mark, and Express Scripts are taking similar measures.

Some of the drugs being dropped have a less expensive or more effective generic form, but others are necessary drugs that have had outrageous price increases in recent years. For example, most of the drugs used to treat Hepatitis C cost between 1 and 3 cents per pill to manufacture, but a typical three-month treatment with one of these drugs costs between, $84,000 and $100,000 at the pharmacy, or about $100 per pill, and treatment is on approval only from the insurance company.

Other effective new drugs used to treat serious conditions like multiple sclerosis are simply dropped from insurance coverage because they cost too much.

Clearly the retail reaction to ICER’s investigation of over-pricing by BIG PHARMA is inconsistent and not always helpful. When price is used to drive care instead of effectiveness, this is what happens, and it isn’t pretty.

Will Big Pharma Co-opt ICER?

ICER funds its activities through donations from nonprofit organizations, conference revenues, and a few small government grants and contracts. However Big Pharma has recently asked ICER to review some its procedures for putting new drugs on the market with an eye to making price more aligned with potential positive outcomes.

No should be surprised that when Big Pharma and ICER co-operate it makes advocates for fair drug pricing nervous. If Big Pharma can co-opt the FDA, what will they do to a small independent research firm like The Institute for Clinical and Economic Review? So far, the jury is out.

In the meantime, ICER is helping to shift the emphasis from profit to effectiveness when it comes to drug pricing. These efforts are having a massive, if uneven, effect.

The bottom line is that people cannot pay hundreds of thousands of dollars for their medications when the median U.S. family income, according to the U.S. Census bureau, is $59,00 per year.

Research firms are like ICER are as necessary in the U.S. as NICE is in Europe. The challenge is to use public pressure to keep them free of corruption.