Study: Health Plans Align with ICER’s Drug Cost-Effectiveness Ratios

Health plans’ drug coverage decisions for specialty drugs are often associated with the Institute for Clinical and Economic Review’s (ICER) value assessments, finds a new study published in the March 2023 issue of the Journal of Managed Care + Specialty Pharmacy.

“We found that, when controlling for other decision-making factors (e.g., orphan drug status, availability of alternatives), U.S. commercial health plans’ specialty drug coverage decisions were associated with ICER’s value assessments,” investigators wrote. “In other words, plans tended to impose fewer coverage restrictions on drugs that ICER estimated to have more favorable cost-effectiveness ratios.”

James D. Chambers, Ph.D.

Investigators, led by James D. Chambers, Ph.D., associate professor of medicine, the Tufts Medical Center Institute for Clinical Research and Health Policy Studies, wanted to evaluate the relationship between ICER’s reported cost-effectiveness ratios and coverage restrictiveness.

They analyzed Tufts Medical Center Specialty Drug Evidence and Coverage Database, which includes specialty drug coverage decisions issued by 17 large U.S. commercial health plans. For ICER-assessed drugs, investigators recorded ICER’s estimated cost-effectiveness ratios in the form of cost per quality-adjusted life-year (QALY) gained. They also examined how often plans cited ICER’s assessments in coverage decisions issued between 2017 and 2020 and whether plans added or removed coverage restrictions in the 12 months following ICER’s assessment.

ICER researchers use quality-adjusted life-year to measure how well therapies lengthen and/or improve patients’ lives. It involves an assessment of both the quantity and quality of life, representing a willingness to pay to gain one quality-adjusted life-year. ICER uses thresholds of $50,000, $150 000, and $175,000 for this analysis. According to ICER’s value framework, treatments with a cost-effectiveness ratio greater than $175,000 per QALY are considered “low value.”

JMCP investigators found that plans tended to cover drugs with less favorable cost-effectiveness ratios more restrictively than drugs with cost-effectiveness ratios less than $100,000 per QALY. Plans, however, cited ICER in just 0.8% of coverage policies in 2017 and 2.4% in 2020. For drugs with cost-effectiveness ratios less than $175,000 per QALY, plans adjusted coverage in 37% of cases, including added restrictions in 20% of cases and removed restrictions in 15%. For drugs with cost-effectiveness ratios of $175,000 or more, plans changed coverage criteria in 29% of cases.

But JMCP investigators also found that plans often restricted drugs with favorable ratios. For example, ICER determined in its 2018 assessment of targeted therapies for moderate-to-severe plaque psoriasis — such as Tremfya (guselkumab) and Skyrizi (risankizumab) — represent value. Plans, however, still require that enrollees first use at least one less expensive alternative — topical therapies, phototherapy, oral systemic treatments, or even older biologic drugs.

Investigators in this study indicated that other factors may also influence health plan coverage restrictiveness, including whether a drug is indicated for a cancer or for a pediatric population, the time since a drug’s FDA approval, whether FDA included the drug in an expedited review program or has orphan drug status, whether the drug is self-administered, and the drug’s annual cost.

One limitation, investigators said, is that they could not account for instances in which plans reviewed an ICER value assessment but did not cite it in their decision. Additionally, investigators relied on dosing information from the drug’s label and a proprietary source of drug pricing to estimate drugs’ annual costs. They said these results may not be generalizable to Medicare or Medicaid payers.

This research study was supported by Amgen, Genentech, Janssen Pharmaceuticals, Otsuka, and GSK.