As breakthrough drugs stream out of biopharmaceutical laboratories, how much they should cost and who will get access to them remain thorny issues.
During his campaign for president, Joe Biden indicated that he plans to set reimbursement for specialty biologic drugs through value assessments conducted by a single independent review board, which could prove to be a problem for patients and vulnerable citizens. Review boards conducting similar value assessments can be rife with conflicts of interests and lean on methodologies that disadvantage certain drugs and the patients who may desperately need them.
Specialty biologic drugs are a category that includes many important breakthrough drugs, such as Herceptin (trastuzumab), Humira (adalimumab), and Rituxan (rituximab). The federal government, which pays for these products for Medicare and Medicaid beneficiaries, has a right to assess their value. Yet patients will be denied new and innovative medicines if those assessments are done poorly.
There have also been reports that the Biden team is considering adopting the value assessment framework used by Germany. The German framework is the best of the worst when it comes to European health technology assessment regimes that limit patient access to new therapies.
In the U.S., an independent organization, the Institute for Clinical and Economic Review (ICER), conducts assessments for new prescription drugs and treatments using the quality-adjusted life years (QALY) methodology. It evaluates a drug’s value against a mathematical equation of one year of perfect health. This framework may discriminate against patients with rare and orphan diseases, older adults, and those with disabilities who may never achieve the QALY definition of “perfect health.”
ICER tends to conduct its reviews soon after FDA approval, a practice designed to quickly increase the leverage of commercial health plans as they conduct their pricing negotiations with drug manufacturers. The downside of this practice is that newly approved medicines, especially drugs for rare diseases, generally have data only from clinical trials, many of which are quite small, and lack evidence of their effectiveness in the real world.
As we have seen from the mRNA vaccines for Covid-19, it is difficult to secure a completely accurate safety and efficacy profile for a medicine even when you enroll 40,000 people in a clinical trial.
The German system does something different. It allows drug manufacturers to launch new medicines at whatever price they choose for one year. That means its value assessment is based on a sample size far more robust than simply the clinical trial data.
There are other important facets of the German system. For example, only the United States makes new cancer medicines available quicker and more broadly than Germany. By comparison, New Zealand makes only about 29% of new cancer medicines available to its residents, with an average delay of 27 months. In Germany, 74% of new medicines become available with an average delay of 11 months. In the U.S., 96% of new cancer medicines become available with an average delay of just zero to two months.
Now for the bad news. While Germany had the highest approval rates (98%) for so-called orphan drugs used to treat rare or less-common diseases between 2013 and 2019, its value assessments also tend to conclude that these drugs provide no new added benefit compared with older drugs, and therefore drug manufacturers could not charge more for their new drug than the older comparator drug. One recent study concluded that Germany rated 73% of new orphan drugs as possessing a “non-quantifiable benefit.”
In October 2020, the FDA released a list of 23 drugs approved during the first three quarters of 2020 that it described as “breakthroughs.” The majority were orphan drugs for cancer and other serious diseases. Would Germany rate 73% of these treatments, which the FDA labels as breakthroughs, as having non-quantifiable benefit?
So while the German model of value assessments is in some ways superior to ICER’s, it tends to have the same flaws most value-assessment models: a conflict of interest.
Suppose the government was in the business of buying cars for every citizen. It might hire “value assessment” consultants to determine whether a dealer’s price is too high. Since these consultants are employed by government, and their mission is to obtain the lowest possible price and serve the most people, in the overwhelming number of cases they would determine that the dealer’s price is too high. They might also place less value on specialty cars, such as those with wheelchair access, than models that serve the majority of people who don’t have special needs.
The consultants would likely construct an elaborate model to argue that their evaluation was objective, but the inputs into the model would of course be designed to reach a preconceived conclusion to achieve a lower price for all people. The consultants would extend that model to show that the high cost of specialty vehicles disproportionately affects the well-being of people without special needs.
These consultants are conflicted because they work for the government and thus will likely do what is in the best interest of their employer. So while the government may have provided you with a car, it may not be the vehicle best suited for your needs.
This is the inherent problem when governments engage “independent” review boards to perform drug value assessments. They tend to see less value in new therapies because they know their mission is to lower costs, not reward innovation. This is compounded by the fact that more innovative therapies are being developed for rare and orphan diseases that treat smaller numbers of people.
Patient advocates should scrutinize any “independent review board” the Biden administration commissions because it will have a conflict of interest and a bias against breakthrough therapies. In this scenario, patients may never receive a new, potentially life-changing therapy because it is rated by a biased review board as not having any “quantifiable benefit” based on its price tag alone rather than the potentially life-changing impact that it could have for patients.
ICER’s sole goal is to reduce drug prices, not evaluate individual patient benefit — which could include quality of life, freedom to work, and time with friends and family, among others. A mathematical equation that defines “perfect health” one way will never measure that. We should look elsewhere for answers to treatment access and affordability.
William S. Smith is a visiting fellow in life sciences at the Boston-based Pioneer Institute.