• D. Maurice Kreis

BS and Bootstrapping: Yet Another Misleading Attack on ICER from the Pioneer Institute

Cancer, to my great regret, is the topic of the week for me. On Monday, a dear friend called and breezily inquired about my well-being. I said I was fine. She replied that she was happy to hear it but couldn't say the same because, in four days, she'd be undergoing surgery for ovarian cancer. My friend confessed she was worried because, like a lot of people who get ovarian cancer, she apparently did not have the benefit of an early diagnosis.

You would think, therefore, that I'd be primed for sympathetic approval upon reading a white paper published just this week that ends with these resonant lines: "The control and cure of cancer, to save lives in this and the next generation, can only be achieved through the discovery of novel treatments. And, let's face it, restricting access to new therapies that can reduce suffering is both cruel and morally unacceptable."

Really? Here's what's morally unacceptable to me -- as a citizen, as a friend to a cancer patient, and as the parent of a young adult with a serious chronic illness (cystic fibrosis): Publishing white papers that exploit our natural feelings of compassion by offering up distorted arguments in defense of unrestrained monopoly pricing by pharmaceutical firms.

The white paper in question is "The QALY and Cancer Treatments: An Ill-Advised Match," by William S. Smith, a visiting fellow at the Boston-based right wing think tank known as the Pioneer Institute. As the former vice president of public affairs and policy for the drug company Pfizer, Smith is a deft propagandist when it does to defending the depredations of Big Pharma.

Here, resurrecting a refrain that both he and the Pioneer Institute have deployed before, Smith goes after two acronyms that will be arcane to those not immersed in healthcare policy: the QALY ("quality-adjusted life-year") and ICER (the Institute for Clinical and Economic Review, based like the Pioneer Institute in Boston).

The QALY is a metric that measures the life-extending effects of drugs and other therapies, adjusted to account for an unassailable reality about health healthcare: to use an admittedly extreme example, a drug that takes someone from the brink of death and restores them to a fully healthy life is more valuable than a drug that extends the life of a person who must live indefinitely on a ventilator.

ICER relies on the QALY as the key metric in the detailed cost-effectiveness studies the organization conducts of new and expensive prescription drugs and emerging therapies. In a better world, ICER would be unnecessary because the government would do these assessments and limit prices paid for these drugs and therapies accordingly. But we don't live in that world and, indeed, are stuck in one that features patents, FDA-approved exclusivity periods, and bans on federal bargaining that effectively allow drug companies to charge whatever they want.

Full disclosure: I recently accepted an opportunity to join the New England Comparative Effectiveness Public Advisory Council (CEPAC), one of three such bodies that ICER convenes to deliberate publicly on its analyses. So I think a lot about ICER and QALYs.

In that regard, there were a couple of things I appreciated about Smith's white paper.

First is that Smith traces the history of the QALY to efforts in Great Britain to limit the price of drugs in the 1960s and 70s. I did not realize we had former Prime Minister Tony Blair to thank, in significant part, for the quest to assess in an objective fashion the value of new drugs.

Second, Smith offers what struck me as a potentially legitimate critique of the QALY metric in the context of cancer treatment. "ICER cost-effectiveness reviews are typically based upon clinical trial data," he writes. "This is a particular problem when evaluating cancer treatments since the clinical trial population in an oncology trial is not representative of the population who will actually take the medicine."

The reason? According to Smith, citing the Congressional Research Service, more than half of oncology drug-use is "off-label" -- i.e., not being used in an FDA-approved manner and, thus, not yielding benefits that were assessed via the clinical trials that typically provide the data inputs for ICER's analyses.

Unfortunately, though, Smith ultimately deploys all of that as a prelude to what is yet another intellectually bankrupt assault on the very idea of assessing the cost-effectiveness of expensive prescription medications. "[T]he withholding of cancer treatments based upon economic modeling has serious ethical implications that are obvious," Smith writes, implying that this is ICER's purpose or, indeed, that it is the reason for QALY-based analysis. ICER "seeks to limit patient access to expensive new treatments and reduce drug costs for payers."

This is wrong and Smith knows it. Analyzing the cost-effectiveness of drugs based on QALYs is not intended to withhold needed therapies from cancer patients or others in need of life-saving and life-saving medications. Its purpose is actually the opposite, by making drugs more affordable by reigning in the ability of pharmaceutical firms to extract monopoly rents in boundless fashion.

"Patient groups, patients and their families who get frustrated at the dodginess of the ICER framework need to keep in mind that ICER is not an independent, objective actor," Smith contends. "ICER was originally formed by the health insurance industry with one goal in mind: lower its drug costs to increase its profits. ICER's roots therefore are not found not an academic body [sic] seeking to ascertain the true 'value' of therapies; all its cost effectiveness reviews need to be understood in this light."

Claims like that meet the "actual malice" standard of the Supreme Court's landmark New York Times v. Sullivan case -- i.e., assertions made by someone who either knows they are false or has acted in reckless disregard of the truth or falsity of his claims. As ICER explains on its web site, the organization was founded within Massachusetts General Hospital (MGH) in 2006 as a research program under the aegis of Harvard Medical School by Steven Pearson, who continues to lead ICER now that it is an independent nonprofit.

Moreover, unlike the Pioneer Institute ICER is completely transparent about its funding. The category of "health plans and provider group contributions" accounts for just nine percent of ICER's revenues; a larger percentage (12 percent) comes from manufacturers. None of these sources pay for ICER's reviews of specific treatments or therapies; these are paid for out of the 69 percent of ICER revenues that come from foundations and individual contributors.

Given Smith's background as an aide to Republican politicians, and given the Pioneer Institute's similar ties to the GOP (e.g., the Republican governor of Massachusetts served for many years as the executive director of the institute), Smith cannot resist taking a swipe at President Biden.

Specifically, Smith doesn't like President Biden's promise to create an independent review board to assess the value of specialized biotech drugs that have little or no competition for market share. "[B]y definition, this review board cannot possibly be 'independent' as the President is publicly arguing that the board's mission will be to cut the costs of biologics, especially cancer therapies, for payers such as the government," Smith complains.

Exactly. The complained-of bug is actually a feature. By definition, unregulated monopoly prices of essential goods are unjust and unreasonable unless and until the entity charging those prices demonstrates otherwise. President Biden, and his counterparts who have sought similar reforms at the state level around the country, deserve the thanks of present and future consumers of expensive prescription medications -- which is to say all of us.

One last complaint about Smith's diatribe in the form of a white paper. He expresses outraged disapproval of ICER-style assessments that rely in part on how the general public assesses the value of quality-of-life improvements. According to Smith, this should be determined with reference to specific population groups rather than the general public.

That sounds plausible only if you don't think about what an exercise in boostrapping it would be to rely on how patients value the quality-of-life improvements they receive via the expensive prescription medications they take. In the field of public utility regulation, this is exactly why we rely on proxy companies (and their valuation from the shareholder perspective) as the centerpiece for determining a reasonable return on investment for a utility's shareholders as opposed to simply asking those shareholders directly what rate of return they think is fair.

The latest breakthrough medication for cystic fibrosis, Trikafta from Vertex Pharmaceuticals, carries a list price that is north of $300,000 a year per patient. For patients with late-stage CF, taking the drug is the difference between life and death. While I am not such a patient myself, I daresay that if I were I would value the benefits of the drug in these circumstances at something much closer to infinity than it is to even the lofty sum of $300,000 a year.

So, for analytical purposes, relying on these subjective patient assessments would mean that no determinations of the value of life improvements would result in a drug being deemed too expensive. That might be fine in a system where the patients themselves were paying the costs out-of-pocket; in those circumstances, the drug companies could simply offer the drugs to the highest consumer-bidders. But of course expensive, life-extending drugs are actually paid for by society at large -- which is why it is appropriate to use the perspective of the general population to determine the value of life improvements.

I want my friend who has cancer get the drugs she needs. I want my daughter who has cystic fibrosis to get the drugs she needs too. The best way to do that is to make sure that cutting-edge prescription medications are priced reasonably as monopoly goods. That's exactly what the Pioneer Institute and other apologists for Big Pharma want to prevent.

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