CVS adopts ICER metrics in shift to value-based drug pricing
- CVS Caremark will use the value-based drug pricing system of the Institute for Clinical and Economic Review to exclude some high-cost drugs from plans, the company announced in a recent white paper.
- The pharmacy benefit manager (PBM) will incorporate ICER's quality-adjusted life years (QALY) measure. If a drug is priced greater than $100,000 per QALY at launch, CVS Caremark will allow its clients to exclude the drug from their plan.
- As middlemen between pharma and healthcare, PBMs have been under attack from both the drug lobby and the White House, both of which claim PBMs are to blame for rising drug prices in the U.S. CVS represents one of the nation's largest PBMs in Caremark. Express Scripts and UnitedHealth run two of the other heavyweights.
PBMs find themselves in the crosshairs of the current drug pricing backlash, with several powerful stakeholders lobbing blame in their direction.
"We're very much eliminating the middlemen," President Donald Trump said in May 11 remarks from the Rose Garden on drug pricing. "The middlemen become very, very rich ... They won't be so rich anymore."
PhRMA, the powerful lobby representing drugmakers, blames PBMs for exorbitant drug prices, claiming they don't pass along savings from negotiated discounts to consumers. The group ran an ad campaign with that accusation this spring.
But PBMs have punched back. CVS Health CEO Larry Merlo refuted the point in an earnings call last week.
"Drug manufacturers want you to believe that increasing drug prices are a result of them having to pay rebates and that PBMs are retaining these rebates," Merlo said. "And this is simply not true."
Now, CVS Caremark announced it will formally use ICER value-based pricing in determining drugs that the company allows plans to exclude from coverage.
QALY is commonly used in Europe to initially price drugs at an effectiveness rated at $50,000 per QALY, according to the white paper. CVS's new policy will allow exclusion of drugs with initial price-points above $100,000.
CVS is hoping the decision will give PBMs more power in pressuring drug prices lower, especially by targeting their launch prices.
"No one but manufacturers have, until now, had any control over the launch price of newly patented drugs," the white paper reads. "This new approach, harnessing the power of the market, could change manufacturer behavior."
David Whitrap, ICER's vice president of communications and outreach, said CVS is just one of many examples of various stakeholders using independent evidence reviews in pricing issues.
"By using independent evaluations to link price more closely to the added clinical benefits a drug provides, drugmakers and payers both can take action to accelerate the transition to a health system that achieves that goal," Whitrap wrote in an emailed statement to BioPharma Dive.
While PhRMA spokesperson Holly Campbell said the group supports using "rigorous, objective evidence to guide formulary decision-making," it has concerns about its broad application.
"At the same time, we strongly oppose misuse of subjective, one-size-fits-all cost effectiveness thresholds to deny patient access to life saving treatment options," Campbell said in a statement. "As many stakeholders have noted, blunt cost-effectiveness thresholds ignore what individual patient and providers value and conflict with the movement toward personalized, 21st century health care."
"We see CVS as stating they want to use a subjective, one-size-fits all approach developed by one organization," Campbell added.
Notably, CVS' change will not affect FDA-designated breakthrough therapies — which frequently encompass high-priced treatments for uncommon diseases.
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