Limitations of ICER's Value Assessment Framework Tool

Alan Balch, PhD: What ICER is trying to do is more like the Abacus. It is meant to be focused at policy makers and thought leaders, and to have a conversation about value-based pricing—as opposed to [being] a decision-making tool.

I think it actually is trying to do it at 2 levels. You’ve got the care value component which is sort of [at the] individual [level]—that “at what price” to reach a certain benchmark of $100,000 per quality adjusted life year, or $150,000. I think the 2 benchmarks are: what does the price need to be in order to meet that threshold? And then, what is the health system value cost?

Making some assumptions about cost over a short period of time, from a health systems perspective, [I ask] what should the cost be? And that’s sort of the score framework.

It makes sense in some ways, because you’re really trying to capture a lot of input, and you try to be thoughtful and systematic and do a thorough cost—benefit analysis. And quality-adjusted life-years has been a standard, or a tried and true way, of measuring value over the years. I think the problem is if you understand, inherently, the limitations of cost–benefit analysis, then you know, inherently, why there’s flaws in trying to do it that way.

You can identify the upfront high-end costs. You can track those costs over time—you know what those are. Most of the benefits are very difficult to monetize and you wouldn’t even try. [For example], if you actually did a cost—benefit analysis, you probably, at the end of the day, depending on the discount rate you select, would determine that it wouldn’t make sense to have a child. But, because the benefits mean so much to you in ways that you can’t monetize, the cost–benefit analysis idea for something like that falls apart.

I think that’s part of the limitation of something like healthcare. You’re talking about people’s lives, and when we look at how much effort we will put into saving one life, we can clearly show that we value life at a rate much greater than $100,000 or $150,000 per quality-adjusted life-year at the individual level.

So, while I think you’ve got to start somewhere, and I like the idea of trying to gather a bunch of data and have a very academic and somewhat relatively transparent way of doing this—to say, “All right, we might not have everything we need, but at least we’re going to put something together that everybody can take a look at and shoot at and decide what we recommend for a policy for exclusion criteria if the price is going to be high.”—I just think, inherently, it has the CBA (cost—benefit analysis) approach, which has so many challenges in this space around trying to identify value at the social level and value at the individual level. From a patient perspective, I don’t know how you get past that.