Introduction and Episode Overview
[00:00:00] Stacey Richter: Episode 494. Six Tensions of Pharmaceutical Drug Pricing. Today I speak with Sarah Emond.
Unexpected Start: Hospital Spend vs Drug Adherence
[00:00:25] Stacey Richter: I was out drinking martinis with Cora Opsahl, all director of 32BJ Health Fund. And Cora said, look, most plan sponsors biggest expense is health system spend, hospital spend. I know this is an unexpected start to an episode about pharmaceutical pricing and value featuring Sarah Emond, CEO of ICER. But yeah, 50% of most plan sponsors spend these days goes to health systems. 50%, one half.
So if a patient who is adherent to a drug and that drug keeps that patient out of the hospital. Why do I want to make a patient have excessive skin in the game to get that drug, which everybody knows at this point, this “skin in the game” can cause said patient to not be adherent in many cases, cost being a very big reason. Patients give for not taking medications as prescribed. So then we have this not adherent patient who winds up in the hospital via the ER often enough.
The core issue here that surfaced bottom line, and I'm not sure if this was in spite of the martinis or as a result of them, but while hospital spend is the largest health expense, high-value drugs that prevent hospitalization often face patient cost sharing and access restrictions, which leads to poor patient adherence and ultimately higher system cost potentially.
So then Cora and I spent the next half hour debating when the statement is empirically true and when it's not. And you know what? It all boils down to. What's the value of the drug?
Do we even know what that means to start? But if it's determined that the drug is relatively high value, then the plan desperately should want to do everything possible to keep that patient on that medication and cost sharing. Is a huge barrier to adherence.
Introducing Sarah Emond and the Core Tensions
[00:02:28] Stacey Richter: Today, as I said, I'm speaking with Sarah Emond, CEO over at ICER, and we get into all of this in the conversation that follows. In fact, most of the conversation that follows, explores the tensions that exist in the current way that we sell and buy pharmaceutical products. I'm just gonna sum up these tensions in a list here at the top of this show.
There's six of them that Sarah Emond and I discussed today by my counting, and each of these we explore in some depth.
Tension 1: Drug Value vs Plan Cost
[00:02:57] Stacey Richter: So here's the list tension one, the value of any given drug. In other words, what is the fair price for that drug considering the health gains that it delivers? Versus the total cost to the plan for the total population taking that drug.
GLP-1s have entered the chat. GLP-1s by ICER's analysis at least, are super high value drugs that also can bankrupt plans due to the number of folks who may benefit from taking the drug. Definitely a tense tension to kick off our list here.
Tension 2: List Price vs Patient Access
[00:03:30] Stacey Richter: Second tension, the list or net price of a drug versus patient access and affordability.
Again, this can be tense in an area of much misalignment. You can have a great well priced drug. With huge patient affordability and access challenges because drug net price and coinsurance amounts often have nothing to do with each other.
Tension 3: Lifetime Value vs Short-Term Assessment
[00:03:53] Stacey Richter: Tension three, lifetime value of a drug versus a three, 2.5 year, whatever time horizon that many plan sponsor actuaries use in their value assessment.
We discussed this today, but there's a Summer Short on actuarial value horizons with Keith Passwater and JR Clark.
Tension 4: Societal Value vs Employer Perception
[00:04:16] Stacey Richter: Tension four. The tension between the societal value of a drug. Or even the patient's perceived value of a drug versus what an employer plan sponsor might perceive as the value.
What is the formula used to determine value? What's in and what's out? So that's a bigger conversation, just beyond the time horizon for what's included in this calculation.
Tension 5: Hypothetical Value vs Measurable Outcomes
[00:04:38] Stacey Richter: Tension five exacerbating the what's included in the value contemplation beyond just what you include in there is the tension between what is hypothetically of value and what is possible to measure.
If you have pharma data sets and medical data sets separate in silos, who knows how many hospital readmissions were prevented by whatever drug? How much presenteeism or absenteeism exists. I mean, it is an outlier. Again, if anyone even knows the net price they paid for a drug. Just to level set context here.
Tension 6: Financial Barriers vs Status Quo Incentives
[00:05:16] Stacey Richter: Tension six. Lowering financial barriers for patients to take drugs that are of value versus status quo goals and incentives. Like for example, PBMs, pharmacy benefit managers are often told that their goal is to reduce drug spend. Okay, so how do I do that? Oh, reduce access either by prior auths or delay tactics or really high coinsurance, which is gonna reduce adherence by design and it's someone else's problem.
If I'm just thinking like a status quo, PBM, if medical spend goes up, right? So that's our last and not insignificant tension.
Summarizing the Tensions and Their Impact
[00:05:52] Stacey Richter: And look who comes out the loser in all of these tensions when they get tense, patients. Not pricing based on value and not buying and setting up cost sharing based on value punishes patients and also plan sponsors or any other ultimate purchaser in the long term, given that the plan is but a population of patients.
Sarah Emond's Advice and Value-Based Pricing
[00:06:12] Stacey Richter: If you start thinking about it in that context, here is Sarah's advice. In a nutshell, pharma sell, pick your price based on something other than market power. And some pharma companies are actually dipping their toe into these waters and doing it.
The Role of PBMs and Plan Sponsors
[00:06:27] Stacey Richter: But then PBMs and plan sponsors have to hold up their end of the bargain here and buy drugs based on their value, not just the size of their rebates or some other discounting promise. And then we gotta continue the through line through to member affordability and access.
High value drugs should get preferred, so right, do a high value formulary. Listen to the show with Nina Lathia on high value Formularies, and then listen after you're done with that one to episode 435 with Dan Mendelson entitled, “Optimized Pharmacy Benefits Are Required If You Wanna Do or Buy Value-Based Care.”
Also, as I said, GLP-1s come up in this conversation, so yeah, buckle up.
One last thing besides my normal thank you to Aventria Health Group for sponsoring this episode. I am so pleased to thank Payerset for donating to help Relentless Health Value stay on the air.
Payerset is a price transparency company with a mission to create fair and equitable healthcare for everyone. Love that. Payerset empowers healthcare organizations, employers, and patients with the most complete set of healthcare price transparency data. They benchmark every negotiated rate and claim and delivering the actionable insights needed for smarter contract negotiations and a more transparent healthcare system.
As I have said several times today, my conversation is with Sarah Emond, CEO of ICER. My name is Stacey Richter.
Sarah Emond, welcome to Relentless Health Value.
[00:07:49] Sarah Emond: It is an absolute pleasure to be here, Stacey. Thank you for having me.
[00:07:53] Stacey Richter: I wanna talk today about tensions, which I think might be a great way to distill down the entire hairball of what is going on with pharmaceutical pricing.
There's a lot going on here. Like we often fight all day about list prices, but it's really tough to then. Get from what is this list price that we fought over to what is the net price that anybody is actually paying as just one stop along our tension journey? But then from there, how does the price of a pharmaceutical translate to patient affordability and access. How do you think about all of that?
[00:08:33] Sarah Emond: I'm gonna steal a line from Antonio Ciaccia, who I recently had the pleasure of being on a panel with, and he said, list prices are a lie, it's a good place to start when thinking about this consideration because list price is what's publicly known about what pharmaceutical companies are charging.
But it is ultimately not the net price that the manufacturer is receiving in most cases. There are a few exceptions to this. There's some classes of medicines where there's very little rebating happening or discounting happening, but overall, the negotiations that happen between the manufacturer and the purchaser, the PBM, the payer, whoever it might be, the government.
Are getting to a net price. It often comes with a benefit. And that benefit might be a preferred formulary placement. You give me a big enough discount, I'm gonna put you at a preferred tier and make it harder for patients and doctors to get access to your competitors drugs. This is an accepted way that negotiation happens in our system.
Does that really center patient affordability and access? Not broadly.
[00:09:43] Stacey Richter: Just to recap there, if a purchaser is negotiating with pharma, how they negotiate to get the best net price is to put into play what the formulary placement is going to be.
Biggest discounts, get the best formulary placement, you would expect that having the best formulary placement. Translates to affordability for patients.
[00:10:06] Sarah Emond: It might improve affordability for the patient who needs that particular drug, but even that's not necessarily guaranteed because they could still have a benefit design that requires them to pay something like a coinsurance based on list price, not the negotiated net price.
And yes, I'm already in the weeds, but I'll bring it back to this idea that. That secret negotiated price can sometimes improve access for certain patients, but not if you're a patient that needs one of those other drugs that's now on a less preferred formulary placement, and so then it gets harder to get that drug.
Because you have to take that preferred drug first, and you might have more cost sharing if you're taking a drug that's on a different tier, so to speak, in the formulary.
[00:10:47] Stacey Richter: Point being that if one drug is paying a big rebate/discount to get in the preferred formulary spot. If there's a patient who needs one of the other drugs in that same drug class, now that other drug is going to be less affordable because the preferred drug literally paid for the other drugs to be less affordable.
How much does this have to do with the value of the pharmaceutical drug.
[00:11:12] Sarah Emond: Well, and that's part of where I have observed that sometimes the rebate model gets in the way of paying for value because your market dominance or your market position can have more to do with how much of a discount you are offering or not. And the ultimate goal of the negotiator is to get a big rebate.
To get a big discount. That is not necessarily the same thing as paying for value. And one of the things that we have been talking about for years, and we're still looking for a purchaser who wants to do this, which is pay for value waive pretty much most prior auth. And eliminate cost sharing. Because if you are paying a value-based price as the ultimate payer, why would you have cost sharing?
You are not trying to get the patient to do something different with their choice of medicine, with their doctor. So if we had a system that had full transparency into the value-based price and all of the payers were paying that value-based price, we actually wouldn't need rebate. We would just have a formulary.
Imagine what it could do for patients with rheumatoid arthritis. There are a lot of drugs approved for rheumatoid arthritis. If you don't respond to some of the older drugs like methotrexate, your choice of which drug you get has to do with the negotiation between the manufacturer and the PBM. It doesn't have anything to do with what's the best choice for you as a patient.
If we paid a value-based price for every rheumatoid arthritis drug that doctor could prescribe whatever drug was best for you, we're just far away from that reality. But I still wanna put it out there as a different choice we could make that again, would work towards deescalating this arms race.
[00:12:59] Stacey Richter: The arms race being just like list prices going up so that rebates can go up.
This is all covered in the bonus clip with Sarah Emond, if you have not listened already.
The first point I wanna make is you mention market dominance and just how the market dominance of a brand will have the most impact on what the pricing is, or the level of the rebate, which by the way, is exactly the same conversation we just had about consolidated health systems.
Listen to episode 491 with Elizabeth Mitchell from PBGH and or episodes 490 and 492 with Shane Cerone and Dr. Sam Flanders. All about health system pricing.
Look at somebody's pricing, and if you want a really great way to figure out whether that number's gonna be really high or really not high, look at their market power.
Don't look at quality. Has nothing to do with anything. It is all about the market power. So I guess same rules apply here.
We often talk about patients having skin in the game. Relative to drugs, and I just wanna point something out if the drug is actually high value. Again, going back to prior shows, guest after guest, after guest have said that hospital prices drive renewal rates.
Hospital prices at this time are often 50% of any given plan sponsors total spend. So if you talk to people who really understand their data, what they are all very focused on is reducing hospitalizations. So now let's just think about this. Oh, we've gotta give patients skin in the game. So we're gonna make sure that they are paying for these drugs that they're getting so that they can make sure they shop wisely.
We're, we're gonna do that. There's a direct correlation between the more a patient pays over a threshold, right? So I'm distilling this down for the purposes of drama, but directionally this is true. The more the patient pays, the less adherence they have. So like if the drug is actually high value. Now instead of the patient paying the drug, that's gonna keep them out of the hospital, which is the thing that's driving renewal rates, we're making the cost of the drug really high, which is gonna diminish adherence.
It's just this weird, counterintuitive. Yeah, there's a tension there again between affordability and access and the price of the drug coming at us from all different directions.
[00:15:18] Sarah Emond: When we think about cost sharing, there are circumstances when I still think it makes sense if there is a generic for a particular drug and the brand is still out there, charging a patient a higher copay to access the brand instead of the generic generally makes sense.
Generics are the same. There are a few exceptions in some cases. Sure. I don't think it makes a lot of sense to have cost sharing on a drug if it happens to be the only drug approved for your condition. You didn't ask to have the condition. It is the only thing that exists that at the end of the day, that is one of the few tools the health insurance system has to try to keep premiums low.
Now, actually. They have other tools. It's one of the few tools they use to keep premiums low. So when they have a client that comes to them and says, well, I can't afford this renewal you're bringing to me. It's 20% higher than last year. What can you do for me? The health plan might come back and say, well, if we shift everybody to and co-insurance from a copay, your renewal rate is only 15%.
And then they say, yes. I don't think it feels good for anyone. I don't think that feels good to the plan. I don't think that feels good to the plan sponsor. But if they're facing a 20% renewal versus a 15 and they realize that might mean they don't have to lay anyone off, I understand how they reach the conclusion that more cost sharing for their employees is a trade off they're willing to take in order to keep running their business.
But these trade offs. are again, they're kind of bananas because we've had such an increase in spending without any real conversation about how to improve affordability and access. Now we're just continuing to pass that burden off to employers and employees. I don't think that's sustainable.
[00:17:09] Stacey Richter: Well, if you just distill everything that you just said, which is the root cause is not paying for value, because if you don't understand what the value of a product is, then what you're left with is cost containment and co-insurance.
Don't forget that the high deductible health plans began as consumer high deductible health plans to give in patient skin in the game. It was perceived that if healthcare is free, and this is. Solid economic theory, right? If you give something away for free, people don't appreciate it and they overutilize.
I did a whole show on moral hazard where I ranted about this for 15 minutes. If anyone is deeply interested, you can go back and listen to that. But this whole. Skin in the game, intention. Now with cost shifting, because there's a lot of instances, and you just gave a great one, where there's a choice between, Hey, do you wanna cost shift to your employees?
Which you know, and Mark Cuban says this all the time. Now the sickest patients are paying for your plan. But that's a choice that people are making. And in the absence of a value equation where you're legitimately figuring out, well, this drug is worth it. In the absence of that, if you have a drug. Which might actually reduce hospitalizations, let's just say, or downstream costs.
And let's just say for the purposes of argument that it's proven to do so. Then raising the cost share, which is gonna lower the utilization could in a very short period of time actually raise plan prices. I mean, if you don't understand what the value is and you haven't conducted those value assessments and you're not paying for value, you'd probably never know that.
There's been so many people on this podcast. I've talked about how draconian cost containment measures don't actually reduce costs. That's right. They look good on paper, but they don't actually reduce costs because humans are humans and. You know, if they don't take their blood pressure over the heart failure med, they are gonna, in fact wind up in the hospital. Whether you're, you have the data set to be able to validate that or not.
GLP-1 Drugs: Cost-Effective but Budget-Busting
[00:19:08] Sarah Emond: I think that one of the parts of talking about this tension and talking about solutions that can often get lost is encapsulated in the GLP-1 example, because the GLP-1s, and I'm talking about Zepbound (tirzepatid) and Wegovy (semaglutide) for obesity are wildly cost effective. When we look at the …
[00:19:29] Stacey Richter: I just wanna pause there because there's the half of our listening audience just had their minds blown. So just to say we're gonna circle up.
[00:19:41] Sarah Emond: Wildly cost effective, but what cost effective means is we are paying a reasonable amount for a unit of health gain over the lifetime of a cohort of patients, and that's what we get with these drugs.
[00:19:55] Stacey Richter: Can you say that one more time?
[00:19:56] Sarah Emond: I certainly can. Cost effective means. We are paying a reasonable amount for a unit of health gain over the lifetime of a cohort of patients. In this case, patients with obesity. So full stop. These drugs are cost effective over a lifetime. That very rarely happens when we look at an analysis.
[00:20:18] Stacey Richter: You sound like a shill for pharma. Are you?
[00:20:21] Sarah Emond: I am not, I'm telling you that we're in this circumstance 'cause of the number of eligible patients, it becomes a budget impact problem when you have 40% of Americans who are potentially eligible for these drugs. That money just has to come from somewhere and that's why we're freaking out about how to figure out affordable access for these drugs.
And we have some ideas, but that's a tension that we don't usually have. We don't usually have a wildly cost effective drug for a big patient population. So this is all kind of a new problem for us. As a society.
[00:20:52] Stacey Richter: Yeah. Where you have a cost effective drug as you put it, that is going to bankrupt any given employer. Like that's a problem.
[00:21:00] Sarah Emond: That's a problem. But we're in this circumstance because we have been ignoring all of the signals that have been telling us for the last 10 to 15 years that we should be paying for value on average, 70 to 75% of the reviews that ICER does; show that pharma has overreached on price.
They are charging society more than the benefit they are able to demonstrate is actually happening to patients. And when you have a system that has been continually doing that, now they're “crying uncle” when a drug is approved, that's wildly effective. That just happens to be for a big part of the population.
And so again, that budget math doesn't work. I make this argument about cell and gene therapies all the time as well. A lot of the cell and gene therapies that we have reviewed are fairly priced in the millions of dollars, and we have plan sponsors and purchasers who are carving out access to cell and gene therapy full stop, no access in their benefit because they have sticker shock for those prices.
And it's a symptom of the problem that they cannot understand how they can continually see the part of the pie that they pay for health insurance that goes to drugs just get bigger and bigger and bigger every year. So their responses, we're not gonna pay for it, and that is a failure of the system to actually pay for value.
So if we had value-based prices all of this time. I don't know that we would see as many responses to cell and gene therapies as we are now, which is, I'm not gonna cover them. I will admit, we'd probably still be freaking out about the GLP-1s just because the eligible patient population is so big.
[[00:22:48] Stacey Richter: So this is the end of the conversation that Sarah and I have talking about GLP-1s.
But for a deep dive ICER just put out their GLP-1 report so you can read all about it there. Link in the show notes. But yeah, it really is something to think about, what is the value of a drug? And then separate that from, is this causing my plan big problems due to so many people who would benefit from said drug.]]
I just, I wanna go through and tick off. The tensions or the perverse incentives, the problems that are inherent in what you said.
Challenges in Value Assessment and Data Integration
[00:23:20] Stacey Richter: So first of all, and a lot of this boils down to the way that US pays for healthcare, if I'm just really thinking about this very critically right now, just around employer sponsored healthcare, because the tension I was gonna bring up is the timeline here.
You said, a unit of health gain across a lifetime. When you have employers who have their time horizon set for 2.5 to 3 years. And I've heard for Part D plans, there's a one-year time horizon.
[00:23:45] Sarah Emond: Mm-hmm. The time horizon is real and it is one of the things that we do a lot of education around when we're talking to different actors in the system who might be able to make change. And one of the things we talk to them about is the fact that one way to think about the churn, which is what you're talking about, right? People who are leaving their company and people who are coming back, you might end up with someone who joins your health plan, who had their sickle cell disease.
Cured by a gene therapy paid for by a different payer. So I always get frustrated with this line of argument when they don't acknowledge that part of the churn. Yes, you're managing things on a one, two, or five year budget time horizon just because that's how you have to plan your premiums and price your premiums.
But if you think that you're always just losing when you pay for something and then someone leaves, you're not acknowledging that you gain health when somebody joins your plan who might have had something addressed previously.
[00:24:49] Stacey Richter: Here's another value for self-insured plan sponsors wrinkle. If the employee is just fine, thank you very much. Going to work and not complaining. What's the value to the employer to bother to manage whatever their condition is?
There are so few plans who have their medical data and their pharmacy data integrated so that it's possible to see like how many hospitalizations or how much medical cost was reduced by a drug.
These are huge limitations of in real life data analytics. And in the absence of this analytic capability, what's the value of the pharmaceutical? Who knows?
[00:25:25] Sarah Emond: The data question comes up a ton. The way that we've structured our system, you're expecting a lot from in a self-insured employer to have the understanding of this pretty hilariously American system of trying to get health insurance and healthcare to employees through their employers. And so yeah, they hire our PBM, the PBM silos, the data on the drug costs from the ACO that they have on the health plan side, managing their medical, and never the twain shall meet.
And so even just understanding what's happening, the data silos are absolutely a problem. And then you just get back to incentives. Is a self-insured employer incentivized to address the diabetes? If that person's still showing up, they might not be, and that we have to just own is real in terms of how they're managing their wellness programs and how they're managing their benefits.
The siloed nature of how we get health insurance, how we get access to medicines, how we pay for things. It's really no surprise that we've ended up in a system this convoluted that's not centering affordable access for patients.
Final Thoughts and Call for Change
[00:26:35] Stacey Richter: So just kind of summing up some of the points that you're making here and just the tensions that we've uncovered. I think the mother of all tensions is if we're not paying for value. Then there's almost no chance that the, even the net price of a drug is going to be connected to patient affordability and access, because no one's thinking about, well, this drug is really valuable, so we should make it affordable and we should have access because I've done all the math.
Right? Obviously, it's a very complicated topic. Which drug should be affordable? Which drug should patients have access to? That is one of those questions that can't answer almost if no one knows what the value of a product is. So that's number one. Number two, the timeline. Again, there's a lot of tension there.
Dan Mendelson from Morgan Health was on the pod a couple of years ago, and he said the same thing. He's just like, look, employers, you're just passing around employees. So stop thinking about, oh, well we're paying for, you know, this employee and I just saved my competition money. It's kind of like, yeah, you'll probably get as many, like just employees who have a certain skillset will move around from one employer to another. So if you kind of just hope it comes out in the wash.
And then the third thing that we talked about was just the level of perverse incentives, the level of the status quo. So just back to the mother of all tensions. Just the the value of a drug and affordability and access. If you have enough people in the system who are making lots of money on it being somewhat dysfunctional, then how are you gonna pay for value to begin with even.
And then the not being able to analyze the data in a way that really can even demonstrate the value. Because if you do have these data silos, if you do have PBMs who are saying, I can't really tell you what the price of a drug is. How are you gonna even assess value?
So all of this spirals around that very, very underlying fundamental points, which is how we know what is value, how are we paying for value? Do we know what the value is? And that budding up against, to your exact point, you've got employers who are running an insurance company off the side of their desk. This is math. Math, it’s difficult. You've got P values, you've got all kinds of stuff. You have to be a very unconflicted, very sophisticated organization to be able to do this.
[00:28:50] Sarah Emond: And I don't know how much we can expect from that community. And that's not a dig on that community because they've got the other priorities that are keeping them up at night as they just try to make ends meet to keep the doors open on their company.
Like I get that. I think it's also representative of something broader. We talk about this a lot, and this is a really important part about thinking about a value assessment because you can have both. You can have a value assessment approach that incentivizes the development of wildly effective drugs.
And you can have a health insurance system that allows access to them without a lot of crazy prior auth and a lot of cost sharing.
And what we pride ourselves on is the way that our value assessment framework has evolved over the years. And just for your listeners, the easiest way to think about it is.
It measures how much better patients feel and how much longer they live. If it's a life limiting condition. It sums all of that up over a lifetime, and we sum up how much it costs to provide that care. That includes net cost savings. Avoided hospitalizations, avoided liver transplants, and then we get a number, and this is where it's okay to feel uncomfortable.
The number is the threshold. How much are we as a society willing to pay for that unit of health gain? We can spend up to that threshold and not harm unseen people in our healthcare system through higher insurance premiums.
That's the win-win.
Will an individual's idea of value for a particular medicine, whether it's a mother choosing for her child. Or a daughter helping their father navigate a serious diagnosis, older in life, yes, they will have other considerations of value that are very important, and we talk about those.
And those benefits, those contextual considerations, those special ethical priorities should be part of the calculus. But what we quantify is what the manufacturers are able to prove through data about how much better it helps you feel and how much longer it helps you live. And that's how we think about value.
[00:31:17] Stacey Richter: So in sum, as a society, we have to figure out what value means. What factors are going to be part of the value equation and which ones aren't. An individual might think certain value factors are really important possibly, but as a society, maybe we just don't. So yeah, that is uncomfortable.
[00:31:35] Sarah Emond: It is, but what I talk about often is how we think about value and how much we should pay for something in the healthcare system is fundamentally about saying how much of the social surplus created by a new intervention deserves to accrue to the manufacturer in price. It doesn't say that's the most value that that medicine ever has.
Paying for value means you will get access at an affordable price if we evolve our system to reflect that reality.
[00:32:04] Stacey Richter: So let's pivot to advice here. If you were gonna distill down, given all that we talked about, what's your advice?
[00:32:10] Sarah Emond: I think that one of the core underpinnings of quality value assessment is freedom from financial conflicts of interest.
And this is why in many countries. This is actually a government function, it is considered a public good to conduct value assessment, and then it can reflect the nuances of that healthcare system, their own financial considerations, their own social values. So if we're thinking about how to structure it in the US it has been very intentional over ICER's nearly 20 years that we have structured ourselves in a way to be free from financial conflicts of interest, but continue to engage with the stakeholders here in the US to make sure that our approach reflects the values and the considerations of our system.
We often make jokes we would love for there to be. A network of independent nonprofits doing value assessment. It just turns out we're the only ones doing it right now. But come on in. The water's warm. Let's go. Because there's plenty that we can be doing not only more drugs, but we can be looking at some of hospital services. We can be looking at medical devices. There's a way to bring rigorous assessment of value anchored in the ethical considerations of health technology assessment to more broadly help our healthcare system pay for value.
[00:33:41] Stacey Richter: Which is also something actually that Dan Mendelson said in that earlier show. He applauded the work of ICER and also said there needs to be more ICER who are financially free of conflict.
And this is not a question of anyone's math skills, although I guess maybe sometimes it is, or at least it's a question of what someone chooses to include in their value assessments or leave out as you were talking about earlier, because if you leave too much out of the value assessment that patients or society might regard as a, you know, surplus.
Or if you don't really have a firm grasp of the clinical downstream impact, because you have no clinicians on your team or actual with a degree epidemiologist, you can easily say very little is of value. Or conversely, you can cherry pick and make the data say anything someone wants if they pay you enough, which you also see happen plenty.
There's just so many very unconscious biases here that really just with the megaphone amplify, I think the points that you're making.
[00:34:45] Sarah Emond: I think there's an opportunity for more leadership from those with the power to change this.
And I'm fundamentally talking about the pharmaceutical companies and the pharmacy benefit managers right now. They're the two entities with the most power right now to deescalate this, I think purchasers have a huge role to play in telling those entities to kind of cut the crap and really focus on solutions.
But at the end of the day, the manufacturers picking the price. The pharmacy benefit manager is negotiating a rebate and formulary placement, and what I'd like to see is more of them working together by referencing something like an ICER report. Now we have examples of that where companies have said: “Hey, I priced within the ICER price range and now payers and pharmacy benefit managers, you need to do your part. Make sure that patients are getting access.”
And there's not a lot of cost sharing, and that's exactly what we saw when Dupixent launched for atopic dermatitis several years ago. Widespread insurance coverage, they admitted to sort of leaving money on the table, at least from a list price or even a net price basis in terms of what they priced it at, given referencing our analysis.
Eisai recently when it launched Leqembi for Alzheimer's Disease, put out a press release with their cost effectiveness math. They talked about the assumptions they made, the cost per life year gain that they used in their analysis, and they came up with a slightly different answer than us, and I would much rather have a conversation about how our models were a little bit different and came up with slightly different answers than I picked this price because I can, that behavior has to end. We have to be showing up with the data. We have to be showing up, talking about the methods and how the methods need to evolve.
Because at the end of the day when we don't, we're punishing patients. We're punishing patients through higher cost sharing, through access restrictions, through higher premiums. And not to mention, just like the pain in the buttness that comes from all of the things that we put into the system to make it really hard to get access.
And if everyone shows up, willing to talk about their data, their value assessment, we're really gonna move the needle, and we're starting to see it.
[00:37:03] Stacey Richter: Summing up your solution ideas here, one of them is assess value in a way that is free from conflict of interest. Nina Lathia talked about this quite a bit in a pod, like have a value-based formulary.
Then the second thing, it then becomes up to everybody to think in that way. It becomes up to pharma to really think through what is a value-based price here. Using some transparent methodology, potentially the ICER analysis. I love how you, you put it there is we priced it this way because of some value assessment as opposed to we priced it this way because we can.
But then you're right, there does become responsibility on the side of purchasers to actually make that value-based formulary. To actually have pharmacists and medical people on their team who, who are looking through what that formulary is, and really thinking about what price they're gonna pay and how they are going to translate the price that they're paying into affordability and access for the members on the plan.
What does that look like? And then the last thing we talked about actually first. So first things last is really contemplating the time horizon. How much does that really matter when employers are passing people back and forth?
[00:38:22] Sarah Emond: You nailed it. You summarized it beautifully. One of the things that I try to emphasize, and so I'll say it again, is that we have gotten into this situation by making a series of choices.
I'm totally using the royal we, I get it. We can make different choices, and what I get frustrated by are the number of people who just are perpetuating the status quo, who believe we cannot make different choices, and I think they're ignoring the real harm that we are doing to patient affordability.
[00:38:54] Stacey Richter: That is a really great quote.
Conclusion and Contact Information
[00:38:55] Stacey Richter: Sarah Emond. If someone is interested in learning more about ICER, where would you direct them?
[00:38:59] Sarah Emond: Please come to our website, icer.org, and if you scroll to the very bottom, sign up for Weekly View, it's a great way to get a sense of what's happening in drug pricing news and to get a latest take on our press releases and our work.
[00:39:12] Stacey Richter: I C E R.org.
[00:39:14] Sarah Emond: You got it.
[00:39:15] Stacey Richter: Sarah Emond, thank you so much for being on Relentless Health Value today.
[00:39:18] Sarah Emond: Thank you. That was so fun. Can't wait to come back.