ICER Receives $13.9 Million Grant, Plans to Assess All New Drugs

The Institute for Clinical and Economic Review (ICER) has announced the receipt a 3-year grant, totaling $13.9 million, from the Laura and John Arnold Foundation (LJAF). ICER, a Boston-based, non-profit drug-pricing watchdog, plans to use the funding in support of its ongoing efforts to change the ways in which new prescription drugs are evaluated and priced.

ICER performs analyses on the effectiveness and costs of medical tests, treatments, and delivery systems; develops reports assessing the value of key new drugs; and creates initiatives that use evidence to drive changes to both practice and policy. Steven D. Pearson, MD, MSc, president of ICER, told Reuters in an interview that its reports on drug value have been used by pharmacy benefit managers (PBMs), such as Express Scripts and CVS Health—as well as by the Department of Veterans Affairs—in negotiating the prices that they pay for high-cost treatments, such as curative hepatitis C drugs.

Initially, ICER relied on list prices of drugs in order to develop its value assessments. Drug makers, for their part, argued that the discounts and rebates that they provide to PBMs and health plans were not accurately reflected in those assessments. To address that issue, ICER has shifted its efforts to attempt, as Pearson put it, to “…come up with a more precise estimate incorporating average net prices, taking rebates into account, to determine what it considers fair value-based pricing.” The new LJAF funding will allow ICER to continue its work in this area, and to expand its value assessments to include all new FDA-approved drugs (rather than focusing on select, high-profile therapies).

The funding follows an earlier, 2-year, $5.2 million award from LJAF in 2015.

“Previous funding from LJAF has allowed ICER to lead a national discussion about prescription drug pricing, and pharmaceutical companies are now beginning to reference ICER’s value-based benchmarks when launching new treatments in the [United States],” Pearson said in a statement announcing the 2017 grant. “However, prices for the majority of medicines still do not reflect the clinical benefit they deliver. By expanding the frequency, scope and reach of our value-based assessments, we will continue to move the country toward a more transparent healthcare system that rewards medical innovation while allowing patients to access the treatments they need.”

LJAF’s president and CEO, Kelli Rhee, praised ICER’s work thus far, saying, “We have seen ICER fill a critical gap in our health care system by providing the information needed to start transparent conversations about the pricing of prescription drugs.” Rhee added, “Through the continuation and expansion of its work, ICER can help stakeholders build a system in which payers, policymakers, drug manufacturers, and others collaborate to bring new drugs to market in a way that allows for optimal patient access, without creating unsustainable strains on health care budgets.”

Among the other projects that will be funded by the new grant are an annual report on drug price increases, collaboration with employers and payers on benefit design and reimbursement programs, and the development of a visiting fellowship program.