CVS Health, parent company of CVS Caremark, one of the three giant pharmaceutical benefit managers (PBMs), issued a white paper in August that addresses ways of “making drugs more affordable.” There’s little doubt that one purpose of the paper is to deflect widespread criticism of PBMs from federal and state governments and the media. Among the measures the study cites are increasing the use of generics and requiring prior authorization for more medicines. The study also defends PBMs against what it terms the “myth” that their opaque system of rebates is causing prices to rise. These are ideas and assertions the PBMs have raised many times in the past.
Toward the end of the paper, CVS Health brings up three new strategies for Caremark to constrain costs. One of those immediately ignited controversy. The company announced that it was starting “a program that allows clients to exclude any drug launched at a price of greater than $100,000 per QALY from their plan. The QALY ratio is determined based on publicly available analyses from the Institute for Clinical and Economic Review (ICER), an organization skilled in the development of comparative effectiveness analyses.” At this stage, the CVS program gives clients the option of participating or not, and it excludes “medications deemed ‘breakthrough’ therapies.”
In coordination with ICER, an organization funded in large part by a foundation with a reputation for aggressive, ideological positions, the health-insurance industry is attempting to make a major change in the access afforded patients to innovative medicines.
As further evidence, in a July 16 comment letter to HHS Secretary Alex Azar, responding to the Trump Administration’s “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs,” the Pharmaceutical Care Management Association, a trade group for PBMs, stated:
To achieve a reasonable level of pricing, the drug could be examined for value by a credible body that would estimate a reasonable range of price for a given drug, based on the value it is expected to bring to patients. One such entity is the Institute for Clinical and Economic Review (ICER).
In a similar comment letter, America’s Health Insurance Plans, another powerful trade group, stated:
We also support CMS in conducting demonstrations to hold manufacturers accountable for outcomes. However,…the demonstrations should explore the potential benefits of an independent entity such as the Institute for Clinical and Economic Review (ICER) that would provide an objective assessment of value for drugs that exceed a certain price threshold.
But is ICER, or any other analyst, really ready to provide such an objective, independent assessment of value? The value framework today seems almost crude – rife with error, myopic, and often biased.
How the QALY Works, or Doesn’t
To understand the source of the controversy, let’s drill down on both QALY and ICER. The acronym QALY stands for “quality-adjusted life year.” It was introduced in an academic paper in 1976 by Richard Zeckhauser and Donald Shephard. The idea was to create a way to evaluate both the duration of life and the quality of that life in one single measure.
The QALY calculation is fairly simple. If a person lives for one year in perfect (100%) health, the person is assigned a QALY of 1, which is derived by multiplying the year of life by a “utility” value of 1.0. The utility number is just a representation of the relative quality of the life. A utility of 1 represents perfect health, a utility of 0 represents death, and everything between reflects different relative states of quality.
So if a person lives a year with only half the utility of perfect health, then the QALY would be 0.5, because the 1 year of life is multiplied by the 0.5 utility value. Similarly, if the person lives for six months at half utility, then the QALY is 0.25 (0.5 year x 0.5 utility value).
Masking the True Patient Experience
These basic calculations immediately reveal that the QALY is a blunt instrument, and that the QALY figures often mask the true patient experience. To see how this is the case, imagine that Patient A has been living for six years in a state severe debilitation, at a utility of 0.3. Now imagine person B has lived in a state of near perfect heath for two years, at a utility of 0.9. The net experiences of both patients would each total 1.8 QALYs for the time periods considered. But can the experience of being severely disabled over a longer period of time really be deemed similar to living in perfect health over a shorter period? Likely not. A utility value tries to quantify the patient experience, but that experience isn’t something that can be boiled down easily.
Beyond the question of the comparability of utilities is the question of how utilities are measured. How do researchers know whether a person is at a 0.4, 0.7, or 0.9?
The answer is more complicated than the calculation of the QALY itself. Utility values are estimated based on a person’s “health-related quality of life.” Qualitative surveys are used for measurement, taking into account such matters as mobility, ability to wash and dress oneself, pain, anxiety, and ability to perform usual activities such as work and leisure. Then those survey data are translated unto utility values.
Because the utility values rely on the survey data, it’s important to examine (a) who was surveyed and (b) what the survey participants were asked. For both questions, we often find surprising answers. The survey populations that are often used to create utility data don’t necessarily represent the “average” patient. For example, data from a large study of physicians is often used as a popular source of utility data. But does the average patient think about her health in the same way as the average physician?
In terms of the kinds of questions asked, there are both general and condition-specific quality-of-life surveys. The general surveys ask about broad elements of health, while the condition-specific measures focus on things that are specific to the disease at hand. Are the results of the general vs. condition-specific surveys the same? Usually not – and yet both kinds of surveys are used interchangeably to measure utility, and ultimately calculate QALYs.
Should We Use Questionable Measurements to Determine If Patients Get Access to Medicines?
These nuances in how QALYs are measured are important because they underlie the uncertainties inherent in using the QALY in any form of decision-making. In other words: If there are many remaining questions about the comparability of utility values and their measurement, should we use them to determine whether patients get access to medicines?
In a Sept. 12 letter to the CEO of CVS Health, more than 90 patient organizations, ranging from the American Association of People With Disabilities to the Bladder Cancer Advocacy Network, wrote:
Our concern reflects deep flaws in ICER’s cost-effectiveness analysis. In particular, policy decisions based on cost-effectiveness ignore important differences among patients and instead rely on a single, one-size-fits-all assessment. Further, cost-effectiveness analysis discriminates against the chronically ill, the elderly and people with disabilities, using algorithms that calculate their lives as “worth less” than people who are younger or non-disabled.
From a clinical care perspective, QALY calculations ignore important differences in individual patient’s needs and preferences. From an ethical perspective, valuing individuals in “perfect health” more highly than those in “less than perfect” states of health is deeply troubling.
In addition QALYs don’t account for non-health benefits that aid society as a whole – for example, the ability of new medicines to reduce the time and efforts of caregivers and effect a faster return to work.
And, as a review of the literature on the limitations of QALY, published in 2016 in the Journal of Stem Cell Research and Therapy by D.A. Pettit of Oxford University and colleagues, states:
The QALY has limitations in producing reliable and valid measurements across disease categories and does not consider a variety of contextual factors including program-specificity, palliative care, mental health and indeed the future of the medical landscape. As it is currently defined, QALYs do not cover the nuances needed within and across disease categories and patients.
The Pettit study examined the shortcomings of ICER’s and other assessment systems and concluded…
Three common themes emerged concerning the limitations of QALYs. These were ethical considerations, methodological issues and theoretical assumptions and context or disease specific considerations.
That’s quite a few deficiencies.
The Role of ICER
The organization that determines the QALY ratio for new drugs under the CVS plan isICER, or the Institute for Clinical and Economic Review, based in Boston. At the very least, anyone using QALY metrics would want the source of the calculations to be completely unbiased. ICER’s primary funding comes from two grants totaling $19.2 million from the Laura and John Arnold Foundation, an organization focused on bringing down drug costs. Certainly, making drugs more affordable is a worthy goal, but Arnold’s concern is not so much patients as insurers, and one major way insurers limit their exposure is by denying patients access to medicines.
The Arnold Foundation’s own ideological biases may explain some of the limitations of ICER’s QALY analysis. For example, ICER does not wait for all clinical data to develop before rendering a judgment. According to a report titled “The ICER Myth,” by the Institute for Patient Access:
In the case of treatments for atopic dermatitis, ICER actually calculated cost effectiveness even before the drug, or its price, were publicly available. This timing restricts how much researchers can know about the drug. In some cases, as with treatments for cholesterol-lowering PCSK9 inhibitors, ICER conducted its analysis before clinical trials of the drug were completed.
In addition, much of ICER’s methodology is qualitative and not transparent, so the process that led to its conclusions cannot be replicated by other analysts.
ICER is not merely an analytical or scorekeeping body. It makes subjective judgments about costs. For example, in a presentation titled (somewhat redundantly),“Evaluating the Value of New Drugs,” ICER says that it will use specific dollar limits per QALY in its reports and in its guidance to CTAF and CEPAC.” (Those acronyms stand for the California Technology Assessment Forum and the New England Comparative Effectiveness Public Advisory Council, bodies that ICER advises). The presentation says, for example, that ICER will set an“Intermediate care value [of] $50,000 - $100,000/QALY if no ‘substantial’ other benefits and/or contextual considerations [are present and] $101,000-$150,000/QALY if ‘substantial’ other benefits and/or contextual considerations [are present].”
The average figure, as in the CVS plan, turns out to be about $100,000 per QALY. Why? Perhaps because it is a nice round number.
It is reasonable, then, to ask whether the intention of ICER’s work is to provide dispassionate assessments of the ability of medicines to prolong and improve life -- or whether ICER is seeking to reduce the cost of drugs by limiting access to them through the adoption of questionable metrics by PBMs.
Why use QALYs at all in determining insurance coverage? An opinion piece by Ami Gopalan of the Precision Medicine Group, a consultancy, in STAT News explains that from “the employer’s or insurer’s perspective, an ICER analysis indicating that a drug does not meet the quality-adjusted life year benchmark provides a transparent rationale for why certain products aren’t covered by the plan.”
In other words, she writes, ICER offers an excuse for not covering a drug, which means that patients “can get access to a drug that isn’t on the formulary only if they pay for it or go through an appeals and grievance process.”
QALYs, NICE, and Cancer Drugs in the U.K.
QALYs are widely used in the UK, where the National Institute for Clinical Excellence (NICE) is responsible for evaluating the clinical and economic value of new therapies. Established in 1999, NICE is huge, with more than 600 employees and expenditures of more than $90 million last year. It is also powerful, with its assessments determining National Health Service (NHS) coverage of drugs.
Generally, NICE applies a “cost-effectiveness threshold range between 20,000 pound sterling and 30,000 pound sterling” (or about $26,000 to $39,000) per QALY. After widespread criticism, the threshold was raised in 2009 to 50,000 pounds (about $59,000) for newly licensed cancer drugs for patients with short life expectancy. That increase was evidence that the QALY analysis system was broken, but NICE’s basic approach has persisted. The result is that the NHS delays or denies access to many innovative medicines that are available to patients in the United States.
Analysis by the firm Context Matters found that from 2007 to 2013, some 79% of appraisals by NICE for cancer medicines and 56% of non-cancer medicines recommended access restrictions. An earlier study of 71 drugs by Joshua P. Cohen of Tufts University Center for the Study of Drug Development and colleagues found that “drugs covered in the US had fewer conditions of reimbursement (15%) than the percentage of drugs given conditions by NICE (46%). US plans were quicker to decide to reimburse drugs following marketing approval than NICE.”
One possible result of restrictions on access is that, despite the revision to the thresholds, five-year survival rates for cancer are higher in the U.S. than in the U.K. Based on American Cancer Society data, for cervical cancer, the rate is 67% in the U.S. and 59% in the U.K.; for breast cancer, 90% in the U.S. vs. 78%; for colorectal cancer, 65% in the U.S. vs. 51%. Other factors may contribute to the differences as well, but innovation is rapidly increasing for cancer pharmaceuticals, and patients want and deserve access to the best medicines.
An example of a recent NICE rejection is the cancer drug Yescarta, an advanced CAR-T cell-therapy treatment for lymphoma that was approved in the U.S. in October 2017.NICE ruled last month that the cost was too high at greater than 50,000 pounds (about $65,000) per QALY gained, compared with current treatments. According to the Sunday Times (U.K.), the Institute for Cancer Research in London “described the Yescarta treatment as a ‘major advance in cancer treatment’ that had cured some who would otherwise have died. It added that it was disappointed at the ruling by NICE.”
No wonder patient groups are so worried about CVS Caremark’s adoption of ICER’s QALY estimates for new medicines.
Alternatives to ICER
An article in 2015 in the New England Journal of Medicine by Cohen and Peter Neumann, also of Tufts, looked at QALY systems and concluded that current “frameworks [led by ICER] will require refinement…before they’re ready to be broadly applied.”
Clearly, the ICER framework still needs refinement, but with the CVS Caremark action and pressure from health insurers, it runs the risk of being more broadly applied than science and society require. One-size-fits all is a term that is properly considered antithetical to medical treatment.
One alternative is a set of more comprehensive value-assessment guidelines, with patient preferences reflected. Tufts and other universities, as well as the Innovation and Value Initiative (IVI), based in Los Angeles, are taking this approach. Jennifer Bright, executive director of the IVI, and Mark Linthicum, the organization’s director of scientific communications, wrote last month in the American Journal of Managed Care:
Patient characteristics and factors that affect their care choices are highly relevant to the outcomes following a prescribed treatment, and yet such information is often missing from value assessment models because such data are not always recorded in clinical trials. Thus, the neat “answer” regarding the value of a treatment often overlooks vital information about sub-populations (e.g., ethnicities, age, gender, or disease sub-type).
Further, the benefits of expanded patient choice are not considered when high-level models—such as ICER’s—only measure clinical benefits, risks, and costs for the average patient. Ultimately, perspectives about how a therapy may work “in the real world” are often relegated to narratives or side-bar discussions rather than being directly factored into the value calculation.
The authors note that “one step in the right direction” is the repeated advocacy by Azar and FDA Commissioner Scott Gottlieb and HHS Secretary for incorporating the voices of patients into measures of value. “Private sector decision makers,” they write, “should join federal officials and champion the same principles in value assessment.”
The National Pharmaceutical Council, a research organization whose members are two dozen biopharmaceutical companies, has published a paper titled “Guiding Practices for Patient-Centered Value Assessment.” The paper says right from the start that “budget impact is not a measure of value” – an implicit critique of the ICER approach.
The Council puts strong emphasis on transparency and “stakeholder input.” Like the IVI approach, the paper also stresses individual choice:
The user should be able to adjust the assessment assumptions and parameters to accommodate individual preferences for different outcomes and factors (e.g., patient preferences for clinical benefit vs. side effects) and make adjustments to represent different scenarios (e.g., payer ability to vary the population).
The paper also states that any assessment has to broaden the aperture:
Patients and society value a variety of factors such as survival, quality of life, the ability to participate in daily activities, caregiver burden, worker productivity, short-term disability, unmet need for diseases with limited or no treatments, burden of disease and innovation. Not including these factors in a value assessment provides an incomplete picture of a treatment’s value.
A focus on value is absolutely appropriate – even urgent – in our health care system. How and why we direct that focus are critical. The Council’s 28 guidelines for development of a value assessment framework make eminent sense at a time when the insurance industry and its allies are rushing to use inadequate standards for limiting patient access to innovative medicines.
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