The Eye of the Beholder

A new white paper takes aim at the Institute for Clinical and Economic Review for its approach to valuing therapies for rare diseases, saying the independent nonprofit’s “negative reviews of rare disease drugs suggest that their goal is not to accommodate the unique contextual challenge of these therapies but simply to push their prices down.”

The paper comes from Pioneer Institute, an independent nonprofit that extols the value of “free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.” William Smith, a visiting fellow in life sciences at Pioneer Institute, authored the report. He is a former Pfizer executive who has had policy roles with the Republican leadership on Capitol Hill, as well as with Massachusetts Governor’s William Weld and Paul Cellucci. He also consults to biotech, pharmaceutical, and medical device companies.

The paper challenges the appropriateness of the application of quality adjusted life years (QALYs) to determine the value of drugs. QALYs are used by the U.K. drug price watchdog the National Institute for Health and Care Excellence, as well as others, as a means of assessing the value of a drug by measuring the ability of a therapy to allow patients to live longer and improve their quality of life. Critics, though, charge it’s a blunt tool used to ration and deny access to medications to vulnerable populations.   

Smith calls the use of QALYs a “one-size-fits-all” approach that will inevitably fail to keep up with medical science’s understanding of how and why different therapies work differently in different patients. “Over the long run, these ICER reviews will be unlikely to provide valuable insights into the cost effectiveness of numerous therapies when those therapies will be understood to present a huge number of variations in patient responses due to complex genetic and metabolomic factors.

He argues that ICER’s use of QALY thresholds are “arbitrary” to begin with, and troubling when applied to treatments for rare diseases. He also calls ICER’s definition of ultra-rare diseases as a condition with 10,000 patients or less “arbitrary” as well.

“Our knowledge of human chemistry, biology and genetics is increasing exponentially and, finally, that knowledge is beginning to bear fruit in the form of drug approvals based upon this new knowledge,” writes Smith. “Why, at this moment in history, would policy makers and payers consciously choose to adopt a cost-effectiveness model that is not only arbitrary, but is particularly ill-suited to evaluate the very therapies that will flow from our explosion in knowledge?”

Smith doesn’t offer an alternative means of determining the value of drugs for rare disease other than to suggest an approach in which patients, their physicians, caregivers, health plan, and a variety of social actors make judgements about the value of particular therapies for particular patients.

David Whitrap, vice president of communications and outreach for ICER, in an extended written response to Rare Daily, said that much of the white paper suggests ICER’s methods are incapable of assessing the “tremendous” value of emerging cell and gene therapies for ultra-rare diseases, using very small clinical trial populations. He notes that ICER’s assessments of the first four of these types of therapies approved by the FDA “all found the treatment to be of good value.”

He said ICER wants broad patient access to all treatments, but at prices that align with how well each treatment improves patients’ lives.

“In a hypothetical world without ICER, consequential decisions around price and access are still going to be made by drugmakers and U.S. insurers – they would just be made behind closed doors, relying on cherry-picked data, and often without the patient perspective,” he said. “I would argue that it’s far better, albeit uncomfortable at times, to force these discussions out into the open, where they can occur in a more explicit and transparent manner, based on an independent look at the evidence, and with patients around the table.”

Pioneer Institute, in describing itself in the report, says it wants to move discussions about healthcare costs away from government-imposed interventions toward market-based reforms. The problem is that the pharmaceutical market doesn’t operate like other markets.

We will never see the types of consumer benefits seen with computers and flat screen television sets because competition is intentionally stymied through intellectual property and exclusivity as an incentive for companies to take the high-risk and make the long-term investment needed to bring innovative therapies to market, particularly for small disease populations.

Several issues complicate the ability to form a consensus about the value of a rare disease therapy in our current system in the United States. Value is disconnected from the payer because the end user of a therapy generally doesn’t pay for it. And, in many cases, there may be limited therapeutic options if any for a patient. In addition, incentives extended to drug developers are designed to prevent traditional market forces from setting the value of these therapies. Will an insurance executive view a curative gene therapy in the same way that a mother of an infant with a deadly genetic disease? Would that value be viewed differently if the gene therapy eliminated the need for a $600,000 a year enzyme replacement therapy?

The challenges of rare disease drug development are well known. Patients fear disrupting a delicate balance that makes drug companies willing to pursue rare disease therapies that could happen if they feel they are unable to be adequately rewarded for the risk associated with bringing treatments for small populations to market.

In the end, what patients care about is access, not price. It is only when price becomes an obstacle to getting a therapy that it becomes an issue. There is a strong case to make for the inadequacy of QALY as a means for capturing the value of a rare disease therapy. Nevertheless, payers will continue to struggle with how to appropriately determine that value. Helping them get this right is in the interest of all stakeholders.