U.S. private health care payers, including insurers and self-insured employers, provide health insurance to more than 200 million people. These private payers face relentless medical inflation in an environment where many other business expenses have been constrained.
Drug spending has received much scrutiny, party because of the high prices of some drugs. The nature of the drug supply chain creates challenges for private payers who need to decide which drugs to cover, for which patients, and under what circumstances. New drug approvals, approved indications, price changes, and the introduction of generic alternatives to brands are among the operational and financing challenges payers must address.
THe Institute for Clinical and Economic Review (ICER) has emerged as a prominent source of cost-effectiveness assessments (CEAs) and budget impact analyses (BIAs) for drug and other medical interventions. ICER proposes that its CEAs “establish a ‘value-based price benchmark’ reflecting how each drug should be priced to appropriately reflect long-term improved patient outcomes.”
We note that there is already a large body of cost-effectiveness research to which payers have access. In our opinion, CEAs can offer value if adapted to payers’ real-world situations and may be a useful point in negotiations between payers and pharmaceutical companies.