New shots fired in drug pricing war

New shots fired in drug pricing war
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The pharmaceutical industry is opening a new line of attack against health insurers in the escalating battle over drug prices.

Global drug lobby the Biotechnology Innovation Organization (BIO) is accusing insurance companies of funneling cash into a little-known outside group that recommends its own drug prices with hopes of driving down overall costs.

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The decade-old group, called the Institute of Clinical and Economic Review (ICER), has been hailed as a “Consumer Reports” for prescription drugs and is one of the only sources of drug data available to the public.

ICER has released in-depth reports on dozens of diseases and conditions, from high cholesterol to end-of-life care.

But in recent weeks, organizations like BIO have called for more scrutiny into the independent group’s ties to the insurance industry. In a debate playing out through online op-eds, critics say insurers are trying to “shirk their responsibility” to pay for pricier drugs that are more effective.

“It’s sort of the oldest trick in Washington. You create a third party, you support it financially and then you get the results that you hope for,” Jim Greenwood, CEO of BIO, said in an interview.

ICER’s ambitious goal is to come up with an independent pricing system that reflects all available data from drugmakers, insurers and patient groups.

Its analyses are dense: The last report on a blood cancer called multiple myeloma was 185 pages. That assessment referenced 137 outside studies and had eight authors.

The group analyzed dozens of clinical trials and found that many of the treatments were overvalued. For one treatment, it recommended a price ranging from $432 to $974 per treatment vial, a discount between 48 percent and 77 percent on the wholesale price.

Drug companies have been fiercely critical of the reports, especially those targeting their products. Drug giants Bristol Myers Squibb and Amgen have both challenged recent ICER findings.  

Dr. Steven Pearson, founder of ICER, said he is used to “a fair amount of pushback” on the group’s reports because of its pricing suggestions 

But he wholly rejected the criticism from BIO, particularly claims about a lack of transparency. 

“What we’ve been doing is raising the scrutiny of drug pricing and providing kind of an alternative voice about what a value-based price might be,” Pearson said in an interview.

ICER broadcasts all of its meetings and releases all evidence, public comments, voting questions and meeting summaries.

“We feel that talking about value, talking about ways to measure value, to talk about how pricing lines up with that, is absolutely what the country needs to have,” Pearson said. “It doesn’t mean the conversation will be always easy. It will definitely have strong opinions on different sides.”

ICER has almost no name recognition beyond a small circle of drug, insurer and patient advocacy representatives deep in the policy world.

The group recently morphed from an academic research group into an official nonprofit. Pearson said for most of the group’s history, it focused far more on medical devices and procedures than drugs. 

But he said there’s been a shift in the last several years as public concerns about affordability began to mount.

Greenwood, who has led BIO since 2005, said he’s become “very concerned” that ICER is increasingly wading into drug pricing, especially as federal and state health agencies are now eying the analyses.

The Centers for Medicare and Medicaid Services said for the first time this year that it could start using ICER’s analysis in a controversial program change that would cut Medicare Part B reimbursement rates to help focus on drugs with the most value.

Greenwood said the third-party group’s results come in the form of “a completely arbitrary low-balled number” that suggests prices for certain drugs and treatments.

“It’s clear the insurance company is relying on these numbers, that’s the whole reason they built this Rube Goldberg machine,” Greenwood said.

Some in the drug lobby have also pointed to ICER’s history in the insurance industry. Pearson, the founder, was a former senior fellow with America’s Health Insurers of America. Several members of its board are also currently at companies including UnitedHealth Group and Blue Cross Blue Shield of California.

The group also receives about 10 percent of its funding from insurance companies, according to its website.

Pearson said his group does receive funding from insurers, though even more — 17 percent — comes from the drug lobby. Those funds are exclusively used for events, not the reports, he said.

Pearson acknowledged his group’s advisory board does include several people who work at insurance companies. He said there are also plans to add another representative to the board in July who was “a major pharma executive until recently.”

The board will also include new members from patient advocacy groups. Pearson underscored that board members do not have any say in the group’s final reports.  

BIO has escalated attacks against the group just a few weeks after Pearson and Greenwood met in person to discuss the group’s methodology.

“We had a debate with him, and he attempted to justify the methodology and the intent of ICER, and I think it’s fair to say our board is not convinced,” Greenwood said about the meeting. 

Still, there is plenty of skepticism about the drug lobby’s attacks against ICER. 

“They don’t really want to get in a debate about risk, value and price. Because they don’t have to,” Jeff Myers, president and CEO of Medicaid Health Plans of America, said in an interview.

Myers, who once worked for pricing committees for pharmaceutical companies, said he agrees with some of the criticism about ICER’s methodology but said the group has been up front with its work. 

“I think trying to silence ICER because you don’t like their conclusions is probably not a good idea,” Myers said.  

BIO’s attacks against ICER came after Greenwood declared last month that he would be publicly injecting himself into the debate over drug pricing. 

In a speech at the group’s annual conference, Greenwood said his industry had become an “easy scapegoat” for candidates in both parties.

Greenwood, a former Republican congressman from Pennsylvania, made clear that he wouldn’t shy away from political attacks.

This year, BIO is planning more paid advertisements and a campaign-style “rapid-response” team that includes a former aide from Jeb Bush’s (R) presidential campaign. BIO is also going “door-to-door” in Congress, where lawmakers have been quick to scrutinize the industry.

The global group is also expanding its ground game. BIO is seeking to create an army of advocates from its 1,200 companies and organizations to help the industry punch back ahead of the fall elections.