Drug Prices Not Consistently Aligned With Value, Analysis Finds

Healthcare in the United States continues to strive for and move toward a value-based system. However, according to study findings, drug pricing is not consistently influenced by value and such influence is masked by inaccessible variables, such as price discounts.

The authors of the study argue that their findings highlight the need to debate how to define and implement value-based evidence in order to drive and inform US coverage and reimbursement decision making. They underscore the fact that in the US, there is no formal consensus on a cost-effectiveness threshold, largely due to a fragmented healthcare system.

The findings were based on a cost-effectiveness analysis of 30 commonly prescribed cardiovascular drugs. Data were extracted from clinical trials conducted between 1985 and 2011 to determine average lifetime quality-adjusted life years (QALYs) and payer-related costs. They also calculated the incremental cost-effectiveness ratios (ICERs), which divides the cost by the difference in health for an intervention versus the alternative.

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Fifteen cardiovascular events, such as nonfatal heart attack, stroke, and cardiac death were taken into account.

The analysis yielded a wide range of cost-effectiveness estimates, from cost-saving with increased QALYs to more costly with decreased QALYs, suggesting that drug pricing is not consistently aligned with value.

The majority of studies analyzed showed an ICER near or below $100,000 per QALY gained, while 5 resulted in an ICER above $175,000 per QALY gained. The authors noted that they were not able to identify drug characteristics such as strength or lack of monopoly power to explain the higher ICERs for the 5 drugs.

“When we purchase a medical treatment, we expect to get something in return, such as living a longer life or having fewer symptoms,” said Melanie Whittington, PhD, research faculty at the University of Colorado School of Pharmacy and co-author of the study, in a statement. “The results of our study show the amount insurance providers pay to get 1 more unit of health, such as 1 additional year of life in perfect health, varies considerably and can exceed what is considered good value in other parts of the world.”

The authors identified several factors that could contribute to the wide spectrum of cost-effectiveness estimates, including that profit-maximizing drug manufacturers may not have to optimize value based on cost-effectiveness when setting their drug prices. They also tout the explanation that the definition of value used in cost-effectiveness analyses does not sufficiently encompass the true value of a drug. Specifically, publicly available drug prices potentially differ from the actual amounts paid.

“As the concept of value for money is maturing in the US, the question of how to inform decisions on what is an acceptable cost per unit of health gained is becoming more urgent,” wrote the authors.

Reference

Campbell J, Belozeroff V, Whittington M, et al. Prices for common cardiovascular drugs in the US are not consistently aligned with value [published online August 2018]. Health Aff. doi: 10.1377/hlthaff.2018.0221.