This is my last post in an ICER versus NICE series that examines how ICER’s and NICE’s methodologies for implementing cost-effectiveness (CE) analyses differ. My last post explored how differences in the use of a fixed CE threshold and the application of a narrower CE threshold range may lead to different intervention recommendations. In this post, I’ll switch from examining CE thresholds to determining whether each organization conducts value-based pricing assessments.
Does ICER Evaluate Value-based Pricing?
The answer is yes; ICER does include a value-based pricing assessment as a component of its evaluation, which is defined as the price a manufacturer could charge to achieve a pre-defined incremental CE ratio. To put this into practice, ICER implements the CE model as presently designed using the input parameters and input values presently specified – with the exception of the primary intervention’s price. Setting the formula for the incremental CE ratio equal to a pre-defined CE threshold of $100,000-$150,000 per QALY gained, ICER solves for the intervention’s price (e.g., on a per-patient per-year or per-patient per-administration basis). An illustrative representation of the calculation, using a CE threshold of $100,000 per QALY gained, can be found below:
where [i] is the intervention, [c] is the comparator, costs[i] do not include the total per patient costs associated with the price[i], and each component of the calculation is measured on a per-patient basis.
Does NICE Evaluate Value-Based Pricing?
The answer is no; NICE does not conduct value-based pricing assessments. In 2010, the Department of Health in the England assigned NICE the task of developing an approach to assess value-based pricing. NICE’s directive from the Department of Health was to consider quantifying alternative aspects of value, taking into account severity of illness, the extent of unmet need, and wider societal considerations (e.g., impact on care takers). In their 2014 consultation paper, NICE recommended its methodology for addressing severity of illness and wider societal impact which included an assessment of proportional and absolute QALY shortfalls.
These approaches were met with criticism and negative feedback from key stakeholders including pharmaceutical companies, academics, and patient advocacy groups. As a result, NICE recommended abandoning the value-based pricing assessment in the short term and has not revisited the topic since 2014.
Who Cares About Value-Based Pricing Assessments?
While ICER’s recommendations for coverage and reimbursement are not legally binding with public or private payers, their value-based pricing assessments have garnered quite a bit of attention in the press. The organization has been called the industry cost watchdog, and for good reason, as they have recommended steep price discounts for a number of recently-evaluated interventions in order to meet CE thresholds. Recent examples have included: Luxturna for the treatment of a rare form of blindness; vesicular monoamine transporter-2 (VMAT2) inhibitors for management of tardive dyskinesia; and anabolic agents for the prevention of fragility fractures associated with osteoporosis.
ICER Value Assessment Framework and NICE’s Guidelines Are Significantly Different
ICER conducts value-based pricing assessments and NICE does not. With the spotlight on value-based pricing initiatives in the US, it will be interesting to see if the attention may trickle over to England, forcing NICE to readdress the issue. Nevertheless, it appears that the subtle procedural and technical differences in the two approaches have the potential to result in different intervention recommendations, with or without value-based pricing evaluations.