America’s health system can’t put insurers before patients

FDA regulators recently approved several revolutionary new medicines to fight America’s leading cause of death: Heart disease.

Dr. Ken Thorpe

Dr. Ken Thorpe

According to a recent study in the New England Journal of Medicine, the new class of drugs known as PCSK9 inhibitors can reduce harmful cholesterol by as much as 60 percent — a potential lifesaver for those who don’t respond well to existing treatments.

It’s difficult to put a value on a breakthrough that could vastly improve the lives of millions of Americans. Yet, a new report from the Institute for Clinical and Economic Review (ICER) concludes that PCSK9 inhibitors are overpriced.

ICER’s findings are part of a troubling trend in defining “value” of new drugs and medical devices through the narrow lens of the insurer without considering broader benefits of better health. Reducing a treatment’s worth to calculations about medical costs ignores the real-life benefits that therapies, procedures, and devices provide. Incomplete analyses like ICER’s pave the way towards policies that will inevitably deny treatments to patients and curtail future medical progress.

Over the last few years, ICER has positioned itself as an impartial authority in evaluating the latest medical treatments, devices, tests, and delivery systems. Unfortunately, the methods employed by the Boston-based nonprofit are often incomplete particularly in its assignment of a “price” for medical advances that fail to consider patient benefits.

Consider its assessment of the “CardioMEMS HF System” recently approved by the FDA. The miniature sensor sends data about a patient’s heart rate and artery pressure wirelessly to hospitals and clinics. According to ICER, the device ought to cost $10,655. How did they come up with such a precise number? By approaching the question of value from the perspective of an insurance company, a government program, or some other health-sector “payer.” The analysis discounts data from randomized trials that show a 37 percent reduction in hospitalizations among heart failure patients.

Specifically, their recommendation reflects the maximum price that could be paid for a medical device without exceeding ICER’s self-imposed “budgetary impact threshold” and assumes that payers will allow unfettered access to the product. In other words, $10,655 is the price at which those budget limits are not breached given their assumptions on the number of patients they assume who would be treated. Factors like ability to work, longer life, or lesser disability do not factor into the calculation of a price. The group used the same logic to justify its calculated “price” for PCSK9 inhibitors.

The problem is that the goal of our health system is to help patients and do so efficiently and effectively. ICER claims to be focused on value, but isn’t addressing the most important question: value to whom?

A reasonable assessment of value for a device, treatment, or procedure would consider the actual benefits it will have for the people who need it. And in the case of the CardioMEMS HF System, those effects are potentially extraordinary.

Thanks to this device, those with serious heart conditions can have their health closely monitored by medical professionals — without being tethered to a hospital bed or a doctor’s office. Any calculation based on insurer costs or medical spending would never capture such rewards.

Even the so-called “comparative-effectiveness” models used by the UK’s controversial National Institute for Health and Care Excellence (NICE) — an institution that explicitly rations care – are less reaching than ICER’s budget-focused analysis, although not by much. After all, both methods assume the perspective of the payer, largely disregarding the unique medical needs, life circumstances, and preferences of individual patients. ICER also disregards the dynamics of the competitive US healthcare market which is far different from the UK’s single payer system.

Defining value is an important discussion we need to have in America, particularly as healthcare shifts from paying for volume to paying for value. That discussion needs to include improvements in patient outcomes relative to changes in the total costs of treating patients if we are truly seeking a patient-centered healthcare system.

Editor’s note: Mr. Thorpe, chairman of the Partnership to Fight Chronic Disease, serves as the Robert W. Woodruff professor and chair of the Department of Health Policy and Management in the Rollins School of Public Health of Emory University in Atlanta.

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