(A) Is it Worth the Money? And (B) Can We Afford it? Assessing the Value of Prescription Drugs

Transcription

1 (A) Is it Worth the Money? And (B) Can We Afford it? Assessing the Value of Prescription Drugs Dan Ollendorf, PhD Chief Scientific Officer Institute for Clinical and Economic Review August 9th, 2016

2 Disclosure I have no actual or potential conflict of interest in relation to this topic or presentation. 2

3 THE IMPACT OF RISING HEALTH CARE COSTS IN MASSACHUSETTS WHERE HEALTH CARE DOLLARS GO DRIVERS OF SPENDING GROWTH VARIATIONS IN SPENDING The Increasing Costs of Health Care Squeeze Out Other Public Spending PrioriJes, Too STATE BUDGET, FY2001 VS. FY2011 (BILLIONS OF DOLLARS) $16 FY2001 FY2011 $14 $12 +$5.1 B (+59%) -$4.0 B (-20%) $10 $8-15% $6 $4 $2-38% -33% -23% -13% -50% -11% $0 Health Coverage (State Employees/GIC; Medicaid/ Health Reform) Public Health Mental Health Educa^on Infrastructure/ Housing NOTE: Dollar figures are inflajon adjusted using a measure specific to government spending as developed by the U.S. Bureau of Labor and StaJsJcs. SOURCE: MassachuseTs Budget and Policy Center Budget Browser. Human Services Local Aid Public Safety MARCH 2013 BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION

4 Drug Prices: Why Should We Care? Green bar (total NHE): Keehan SP et al., Health Aff 2015;34:

5 Pricing of new (or old) pharmaceuticals: current US context 5

6 The ICER Value Framework The problems the value framework was intended to address Need for improved transparency and consistency of value determinations by HTA groups and payers Mismatch between concepts and terms used to describe value across patients, clinicians, innovators, and payers Need for a more explicit and transparent way for HTA groups and payers to analyze and judge value Framework for population-level policy decisions sensitive to patient and clinician perspectives Addressing potential tension between long-term and short-term perspectives Copyright ICER

7 A Value Assessment Flowchart Compara^ve Clinical Effec^veness Incremental cost per clinical outcomes achieved Other benefits or disadvantages Contextual Considera^ons Care Value Discussed and voted upon during public meetings High Intermediate Low Care Value Discussed and voted upon during public meetings High Intermediate Low Poten^al Short-Term Health System Budget Impact Provisional Health System Value Discussed and voted upon during public meetings High Intermediate Low Mechanisms to Maximize Health System Value Discussed during public meetings; included in final ICER reports Achieved Health System Value Not evaluated by ICER or voted upon by public panels 7

8 Comparative Clinical Effectiveness ComparaJve Clinical EffecJveness Incremental cost per outcomes achieved Other Benefits or Disadvantages Contextual ConsideraJons Care Value Comparative clinical effectiveness reflects a joint judgment of the magnitude of the comparative net health benefit and the level of certainty in the evidence on net health benefit. ICER reports use the ICER EBM matrix ( to describe the scientific staff s judgment of comparative clinical effectiveness. 8

9 Incremental Cost per Outcomes Achieved ComparaJve Clinical EffecJveness Incremental Cost per Outcomes Achieved Other Benefits or Disadvantages Contextual ConsideraJons Care Value Incremental Cost per Outcomes Achieved Cost per aggregated health measure (QALY) ICER uses commonly cited cost/qaly thresholds in its guidance to its public appraisal committees Associated with high care value <$100,000/QALY Associated with intermediate care value $ K/QALY Associated with low care value >$150,000/QALY 1-3x GDP Per capita 9

10 Other Benefits or Disadvantages ComparaJve Clinical EffecJveness Incremental Cost per Outcomes Achieved Other Benefits or Disadvantages Contextual ConsideraJons Care Value Benefits or disadvantages offered by the intervention to the individual patient, caregivers, the delivery system, other patients, or the public that would not have been considered as part of the evidence on comparative clinical effectiveness. Methods of administration that improve or diminish patient acceptability and adherence A public health benefit, e.g. reducing new infections Treatment outcomes that reduce disparities across various patient groups To be judged not by ICER but by one of its independent public appraisal committees 10

11 Contextual Considerations ComparaJve Clinical EffecJveness Incremental Cost per Outcomes Achieved Other Benefits or Disadvantages Contextual ConsideraJons Care Value Contextual considerations include ethical, legal, or other issues that influence the relative priority of illnesses and interventions. Specific issues to be considered: Is this a condition of notably high severity for which other acceptable treatments do not exist? Are other, equally or potentially more effective treatments nearing introduction into practice? Would other societal values accord substantially more or less priority to providing access to this treatment for this patient population? To be judged not by ICER but by one of its independent public appraisal committees 11

12 A Value Assessment Flowchart Compara^ve Clinical Effec^veness Incremental cost per clinical outcomes achieved Other benefits or disadvantages Contextual Considera^ons Care Value Discussed and voted upon during public meetings High Intermediate Low Care Value Discussed and voted upon during public meetings High Intermediate Low Poten^al Short-Term Health System Budget Impact Provisional Health System Value Discussed and voted upon during public meetings High Intermediate Low Mechanisms to Maximize Health System Value Discussed during public meetings; included in final ICER reports Achieved Health System Value Not evaluated by ICER or voted upon by public panels 12

13 Provisional Health System Value? Care Value PotenJal Health System Budget Impact Provisional Health System Value Mechanisms to Maximize System Value Achieved Health System Value Provisional Health System Value Trying to address possible tension between long-term and short-term perspectives on value to the health system Provisional health system value is intended to represent a judgment of whether a new intervention with acceptable long-term care value may yet have short-term costs so substantial as to displace more valuable services (opportunity cost) and/or lead to unsustainable short-term increases in overall health spending. Short term costs = potential short-term budget impact

14 Summary of Potential Budget Impact Threshold Calculations Item Parameter Es^mate Es^mate Source (Drugs) (Devices) 1 Growth in US GDP, (est.) +1% 3.75% 3.75% World Bank, Total health care spending ($) $3.08 trillion $3.08 trillion CMS NHE, ContribuJon of drug/device spending to total health care spending (%) 13.3% 6.0% CMS NHE, Altarum InsJtute, ContribuJon of drug spending to total health care spending ($) (Row 2 x Row 3) 5 Annual threshold for net health care cost growth for ALL new drugs (Row 1 x Row 4) 6 Average annual number of new molecular enjty or device approvals, Annual threshold for average cost growth per individual new molecular enjty (Row 5 Row 6) $410 billion $185 billion CalculaJon $15.4 billion $6.9 billion CalculaJon FDA, 2014 $452 million $301 million CalculaJon 8 Annual threshold for esjmated potenjal budget impact for each individual new molecular enjty (doubling of Row 7) $904 million $603 million CalculaJon

15 Potential budget impact: Experience to date Exceeded alarm bell threshold PCSK9 inhibitors for high cholesterol Entresto for heart failure CardioMEMS system for heart failure Ocaliva for NASH Did not exceed alarm bell threshold Nucala for severe eosinophilic asthma New drugs for multiple myeloma Tresiba for diabetes Ocaliva for primary biliary cholangitis Diabetes prevention programs Palliative care in the outpatient setting

16 From Value Assessment to Value-Based Price Benchmarks Price to Achieve $100K/QALY Price to Achieve $150K/QALY Price at Short-Term Affordability Threshold PCSK9 Drugs List price $14,350 (n=2,636,179) $5,404 $7,735 $2,177 46%-62% discount Price to Achieve $100K/QALY Price to Achieve $150K/QALY Price at Short-Term Affordability Threshold Entresto List price $4,560 (n=1,949,400) $9,480 $14,472 $4, x higher! 9% discount

17 Formulary Design and Policy Prescriptions to Reward Value-Based Pricing PRICE MEETS BENCHMARK Mandatory inclusion in formulary First tier with zero or low co-pay Default gold card with providers Include entire price in new technology add-on payments Set Part B coinsurance to low level Exclude from 340B discount program Increase FDA exclusivity period PRICE EXCEEDS BENCHMARK Lower tier or allow exclusion Full exercise of step therapy, etc. Reimburse up to value-based price Include only value-based price in bundles Increase transparency to justify prices over value-based price Include in 340B program discounts Decrease FDA exclusivity period

18 18 Reprinted with permission from CG Cameron, PhD Tension between Short- and Long- Term Value: a U.S.-only Issue?

19 Summary Value framework created in recognition that prices of new, high-impact drugs may be disconnected from perceptions of value from multiple perspectives Additional recognition that such frameworks for decisionmaking already exist in Canada and many other developed nations Explicit consideration of health-system affordability must also now be part of the conversation Framework tools such as ICER s can be used to inform policy discussion and trend reporting at state/ provincial level 19

20 Q&A Personal contact: 20