Placeholder Banner

ICER's Flawed Methodology Could Lead To Healthcare Rationing

June 15, 2016
In a column published in USA Today recently, Jeff Stier, a Senior Fellow at the National Center for Public Policy Research, sheds light on the Institute for Clinical and Economic Review (ICER). Stier points out the group’s fundamentally-flawed (and possibly dangerous) approach and how their reports influence which drugs are listed on your insurer’s formulary based on what those drugs will cost the insurer – rather than what’s best for you as a patient.
 “…we’ve all heard stories where insurance companies won’t fully cover a drug that both the doctor and patient believe is the right medical choice. Why not? It’s pretty simple: the insurance companies don’t want to pay.

“As cutting edge drugs come to market, insurance companies are scrambling to find ways to justify not paying for them.”

Stier also notes the implications of such a board in the broader healthcare system. He compares it to Great Britain’s National Institute for Health and Care Excellence (NICE), which has outsized influence in determining which medicines the government will cover in the country’s single-payer system. In fact, it was created by politicians who didn’t want to be in charge of rationing care in their single-payer system and were looking for an “objective” scapegoat.

So, he is correct when he points out that, not only does this type of approach stifle innovation in the biopharma industry, but it also inevitably leads to healthcare rationing.

This is dangerous and wrong.

Stier notes the obvious:
“Different people respond differently to medications … Individuals, it turns out, are different.”

So how does ICER determine the cost-effectiveness of a particular drug?  Health policy consultant and cancer survivor, Jennifer Hinkel, uncovers ICER’s methodology by examining the Quality Adjusted Life Year (QALY):
“As a one-sentence crash course in health economics, the QALY is an invented metric that values a healthy year at “1.0” and then devalues a person’s year to a fraction if they are diagnosed with a disease. For example, in ICER’s Multiple Myeloma report, a person with Multiple Myeloma might have a QALY worth only 0.61 to 0.82 instead of 1.0. In the most basic terms: if you get sick, you become a fraction, and your time no longer has the same value as a fully healthy person’s time. In the case of ICER’s report, once you’re diagnosed with Multiple Myeloma, your time might be valued as low as 3/5 of a whole. In some QALY-based evaluations, a person never recovers full value for their time, even if she or he survives the disease.

“While using the QALY might be a nice academic exercise, its use becomes discriminatory when it’s used to ration care for particular groups of patients or prioritize spending.”

Bob Goldberg, vice president and co-founder for The Center for Medicine in the Public Interest (CMPI), found startling results on what ICER’s methodology would mean for patients with multiple myeloma. He writes that, under their plan, “44,000 fewer patients with the cancer multiple myeloma will be alive within the next five years than if access to new medicines continues to grow at historical levels.”

Unfortunately, ICER’s flawed methodology is being used by your insurance company in major ways. Instead of designing thoughtful benefit plans tailored for their customers, they simply look to ICER’s dubious analysis to disproportionately justify their decisions to refuse appropriate medical coverage. In the end, that means you pay more for less coverage, and can’t affordably access the medicine your doctor thinks you need.

With every paycheck, you pay your insurance company and expect them to be ready when you need them. But when the time comes, they shirk their responsibility—hiding behind a fundamentally flawed third-party report that gives them cover to ration your care.  Is it any surprise that insurers are a major funder of ICER?

The biopharma industry is ready to engage in an open and honest dialogue with all stakeholders in the healthcare industry about how we can make our innovations accessible to all who need them. But it’s simply wrong for insurers to use flawed methodology that justifies even more denials in coverage and leads to healthcare rationing.