Mouse Among Health Care Elephants: Boston Nonprofit Calls Out 'Unfair' Drug Prices

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Steven Pearson is the founder and president of the Institute for Clinical and Economic Review, which aims to calculate fair prices for drugs. (Jesse Costa/WBUR)
Steven Pearson is the founder and president of the Institute for Clinical and Economic Review, which aims to calculate fair prices for drugs. (Jesse Costa/WBUR)

A small nonprofit based in Boston has a rising reputation as the nation's "drug price watchdog." It's also been called "big pharma's biggest threat."

It's the Institute for Clinical and Economic Review — known widely by the acronym ICER. It crunches the numbers to estimate how much a drug should cost, given how much it actually helps patients.

A new WBUR poll suggests ICER's work seeking a rational basis for drug prices is well warranted: More than three-quarters of respondents said they find American drug prices unreasonable.

At ICER's downtown Boston headquarters, founder and president Dr. Steve Pearson leads the way past offices and cubicles, desktop computers and meeting rooms.

It might seem dull. And the name — the Institute for Clinical and Economic Review — could make anyone feel drowsy. But this quiet office is actually a powerful player in the increasingly furious fight over American drug prices.

"No matter how well we work with people, this is a contact sport," Pearson says.

A whiteboard at one desk hints at its role. The writing reads: peanut allergy, heart disease, rheumatoid arthritis and an abbreviation — UPI, for "unsupported price increase."

"We have no rational signpost for when something is too expensive or fairly priced. ICER has stepped into that void."

Michael Sherman, Harvard Pilgrim Health Care

These are topics that ICER will be researching — to produce reports that can act like bombshells thrown into the drug price battle. Not that Pearson uses a bombshell style. He and his colleagues coolly calculate whether a drug is cost-effective, whether it's worth its price.

For example, when a powerful new drug to lower high cholesterol came out in 2014 priced at $14,000 a year, ICER calculated that it was only worth about $3,000, putting pressure on the drug's maker to lower the price — which it later did.

Pearson says ICER looks into treatments where the evidence is hard to understand "and where the question about the value to patients and the system is going to be something where our research can help make it more transparent. So that can include treatments for very acute severe conditions like cancer, it can include preventive strategies for things like peanut allergy, and anything in between."

ICER calculates how much each drug extends a patient's life and improves their life. It uses a complex economic model; in the simplest terms, it considers a drug cost-effective if it costs no more than $150,000 per year of quality life it gives the average patient.

"Ultimately, we want to be able to figure out what a fair price is so that we can get better access and make it affordable and sustainable for the long-term, while making sure that we reward the people who really bring good innovation into our system," Pearson said.

It's no small task for an independent nonprofit with just about 30 full-time staffers. In other developed countries, a government agency decides on drug prices and value. In the United Kingdom, which has a national health care system, that agency goes by the acronym NICE.

But the United States has nothing like NICE, says Michael Sherman, the chief medical officer of the insurer Harvard Pilgrim Health Care and a member of ICER's advisory board.

"Consequently, we have no rational signpost for when something is too expensive or fairly priced," Sherman said. "ICER has stepped into that void, and fills that role and provides information to entities like Harvard Pilgrim."

The health insurer can then use that information to make coverage decisions and in negotiations with drugmakers.

Without ICER, Sherman says, health insurers would try to estimate on their own what drug prices should be, relying on input from drugmakers. But of course, drug companies want prices to be as high as possible and insurers want them to be as low as possible.

"So having an objective third party — and they've got everyone at the table in terms of stakeholders — that is not us and not them is incredibly valuable," Sherman said.

Some critics dispute whether ICER is truly objective, and question its methodology and goals.

"I say, 'ICER, they make reports for insurance so that insurance can deny you care,'" says Terry Wilcox, executive director of Patients Rising, a national advocacy group mainly funded by drug companies. It runs a website called ICERWatch that keeps a critical eye on what ICER does.

Wilcox said ICER talks about the importance of using solid, peer-reviewed medical evidence. But, she wonders, "Who's peer reviewing you, as an organization? You're coming out with a report saying this medicine is only worth this because this patient is only worth this. I think that as a country, we can do better."

At PhRMA, the national trade group for drugmakers, senior director of policy and research Lauren Neves says PhRMA supports the type of research on value that ICER does. But it has concerns about how insurers use the ICER reports to deny coverage.

Commercial insurers started using ICER's work first, she said, "but now we're seeing an increase in discussion about using it in Medicare or even on the state level in Medicaid."

The Department of Veteran's Affairs is already using ICER reports to assess the value of drugs for veterans, she said.

"We're just concerned that that interferes with the veteran in that case, or the patient, their ability to decide with their doctor what treatment's right for them, Neves said. "It basically allows ICER or the government to make that decision."

ICER president Pearson said the nonprofit's work is not meant to get in between patients and doctors.

"It's really meant to say, 'At what price would it be fair?' And our system being what it is, you know, people will try to push some of the cost onto patients or not."

"Sometimes we feel like we're this small mouse, and yet the big elephants tremble in many ways, and sometimes it is with fear, because what we are producing does threaten some people's business models."

ICER President Steven Pearson

ICER began as a small research project at Harvard Medical School, but it really took off after getting a major foundation grant from the Laura and John Arnold Foundation in 2015. The Arnolds are also funding other efforts focused on drug prices.

The ICER team's work challenges the status quo on drug prices, "and that means that sometimes people don't like us," Pearson says.

"[There are] a lot of powerful interests, obviously, in the health care system. And sometimes we feel like we're this small mouse, and yet the big elephants tremble in many ways, and sometimes it is with fear, because what we are producing does threaten some people's business models."

One of ICER's main defenses is transparency — it makes most of its work public and posts videos of public meetings that include patients, doctors and drug-makers.

At a recent meeting on a new drug that appears able to save the lives of babies with a genetic disease called spinal muscular atrophy, or SMA, Pearson can be seen on video, saying: "We know what the natural history of type 1 SMA is. These babies never sit. After a couple of years, they don't move. They are ventilated, or they die ... That isn't what happened in those 12 patients."

It's a small sample, but he concludes: "And so we're sure the drug has a substantial benefit."

The patients were given a new gene therapy, called Zolgensma, that ICER assessed at its highest value ever: worth up to $2.1 million for a one-time treatment. The drug's maker, Novartis, priced it last month at just that: $2.1 million, citing ICER's assessment.

Pearson takes that sky-high price in stride.

"We're not a blunt tool out to say that the prices are too damned high," he said. "We are here to say that we in the United States often get tremendous value from the innovation that we fund through so many different channels, and we are getting ripped off, and we have just been really bad at distinguishing between the two."

ICER can be criticized on certain points, says Dr. Peter Neumann, a health economist at Tufts Medical Center who's not affiliated with the institute, but it's filling a major gap.

"I've argued that they're doing something hard and challenging and needed, and by and large they do it well, with limited resources," he said. And as the fierce debate over drug prices intensifies, "I think they'll continue to play this role — likely they grow even more important."

This segment aired on June 26, 2019.


Carey Goldberg Editor, CommonHealth
Carey Goldberg is the editor of WBUR's CommonHealth section.



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