Americans spend more on prescription drugs than anyone else in the world. In a move to address this, CVS Caremark announced in August that it would allow self-funded insurers to exclude from their plan any drug launched at a price greater than $100,000 per QALY (quality adjusted life year).

A bold move in the shift to value-based reimbursement

CVS advertises its program as incentivizing pharmaceutical companies to lower launch prices, pointing to QALYs approaching the $300,000 to $500,000 range, a stark contrast to thresholds on medicine pricing in Europe ranging from $10,000 to $50,000/QALY. The policy will use analyses from the non-profit Institute for Clinical and Economic Review (ICER) but excludes FDA-defined “breakthrough” therapies.1

A controversial announcement

Robert Dubois, MD, PhD, Chief Science Officer of the National Pharmaceutical Council (NPC), criticized the move as being “too much too soon” with the potential to “hamper patients’ access to needed medications”. He points to the many limitations of the QALY and endorses a wider value assessment framework that considers factors like the importance of high cost medicines for inadequately treated illnesses as well as secondary values like increased economic productivity of patients. Some of these are in line with considerations by European organizations like the National Institute for Health and Care Excellence (NICE). He goes further to criticize the threshold of $100,000 per QALY as arbitrary, preferring the approach of tying formulary tiers and co-payments to cost-effectiveness to make a broader set of medicines available.

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