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Nonprofit’s Flawed Drug Pricing Calculations Could Mean Major Issues For Seniors

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Juliegrace Brufke Capitol Hill Reporter

A nonprofit the government is pushing to use to help calculate payments for seniors’ drugs under Medicare Part B may be using a flawed method, which could lead to patients being prescribed less effective and cost-friendly treatment plans.

The Institute for Clinical and Economic Review (ICER) is a Boston-based nonprofit largely funded by health insurance companies, health trade associations and pharmacy benefit managers. It uses a model to calculate the value of drug prices similar to what is used in the United Kingdom. The drug payment model incorporates data using quality-adjusted life years (QALYs), a tool used for rationing health care by measuring disease burden.

Experts say the issue with the tool is it fails to incorporate critical components like patient and doctor input.

“ICER deserves credit for explicitly introducing budget constraints into value assessments, but reducing a drug’s price to satisfy a specific budget criterion isn’t always appropriate,” Dr. Peter Neumann and Dr. Joshua Cohen recently wrote in the New England Journal of Medicine. “For example, ICER’s budget criterion might dissuade companies from developing drugs designed to help large portions of the population.”

Advera Health Analytics, a California-based health-care informatics company, expressed its concern ICER’s framework. The company claims it is faulty in that it doesn’t incorporate most types of health care spending and doesn’t take into account how funds are needed for innovation to treat certain types of cancers and Alzheimer’s disease.

“ICER’s model presumes total spending on medicines should not grow in relation to other categories of health care spending even if medicines are producing the most significant advances for patients,” Advera Health Analytics officials wrote in a letter to ICER’s President Steven Pearson. “As a result, ICER’s framework ignores the value of reallocating health care spending to care that improves patient outcomes or reduces hospitalizations or emergency room visits.”

GOP lawmakers in both chambers of Congress have urged the Centers of Medicare and Medicaid to withdraw its recent proposal to use ICER’s calculations in fear it won’t work in patients’ best interests.

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