Drug prices should be based on their value
crisis of skyrocketing health-care costs.
It’s a daunting situation. Thankfully, not all of us are throwing up our hands.
The Institute for Clinical and Economic Review is an independent research organization that objectively evaluates the clinical and economic value of prescription drugs, medical tests and other products and services. To address the trajectory of prescription-drug prices, ICER has created a formula for pricing a drug based on the value it provides.
So instead of being left to wonder how a small container of pills can cost hundreds of thousands of dollars, ICER serves as an honest broker as to which prescription medicines are priced consistent with their benefits and which ones are inflated in order to maximize corporate profits.
For example, a Bostonbased company called Vertex produces a drug called Orkambi for mutations covering nearly half of cystic-fibrosis patients. Despite its $272,000 price, according to a June 24 New York Times story, Orkambi “has been shown to only modestly help patients.”
ICER determined that Orkambi is more than four times as expensive as the benchmark for cancer drugs. Based upon ICER’s findings, the state of New York in April asked Vertex for a 70 percent markdown on its drug. Orkambi was one of 30 overpriced drugs identified by the state — and Vertex was the only company that refused to agree to a discount.
Just hours after the New York State Medicaid meeting, Vertex announced a 33 percent net profit margin for 2018’s first quarter. And a big part of the company’s financial success has been Orkambi, which last year accounted for approximately $1.3 billion in sales.
The efforts by ICER and the state of New York to hold Vertex accountable for its prices were the subject of Dr. Benjamin Kopp’s op-ed published in the Sept. 15 Columbus Dispatch. In his column, Dr. Kopp declared, “Basing health-care coverage on a cold mathematical calculation is cruel,” and erroneously described ICER as “an insurance-industrysupported think tank.”
In fact, a visit to ICER’s website would reveal that the organization has as many members in the prescription-drug industry as it does among insurers. And one of the reasons ICER has earned its reputation as the nation’s watchdog on drug pricing is because its reports are exclusively funded by nonprofit foundations and other sources free of conflicts of interest from the life-science industry or insurers.
In other words, ICER is beholden to no one — something that cannot be said for some of the doctors who are outspoken in their defense of the pharmaceutical industry.
The Centers for Medicare & Medicaid Services openpayment data tool sheds light on the payments made by drug companies to physicians and teaching hospitals. Just visit openpaymentsdata.cms.gov and type any physician’s name into the search tool, and you learn exactly how much money companies such as Vertex are paying him or her for consulting, travel and meals.
Transparency is always a good thing, whether it’s information about the cost of prescription drugs or about the motivations of the people who are promoting them.
Cornering the market with overpriced drugs is not compassionate, and to call out those who do so, as ICER has, is neither cold nor cruel. It is necessary — and an important step in addressing a crisis.