The problem with insurers determining value of drugs, devices

It's no secret that rising prescription drug costs are a major issue on the minds of consumers, health insurance executives and even presidential candidates. But it may not be wise to define the value of pricey new drugs solely through the lens of cost-conscious health insurers without considering their broader health benefits, one expert argues.

"Reducing a treatment's worth to calculations about medical costs and offsets and impact on budget constraints ignores the real-life benefits that the latest therapies, procedures and devices provide," Emory University's Kenneth Thorpe, Ph.D., who also serves as the chairman of the Partnership to Fight Chronic Disease, writes in a contributed blog post for The Hill.

With the cost of specialty drugs expected to rise even further, payers are increasingly looking for ways to pay for value for prescription drugs--in some cases joining providers to push pharmaceutical companies toward deals that tie price to treatment efficacy.

But Thorpe is concerned about the Institute for Clinical and Economic Review's (ICER) recent report that concludes a new class of cholesterol drugs, known as PCSK9 inhibitors, is overpriced. That assessment doesn't take into account the studies that show how effective these medications are, he writes, as they have been shown to have a least a 6-to-1 return on investment.

The same can be said of the "CardioMEMS HF System," which implants a sensor in a patient's artery to send health information wirelessly to healthcare providers. Thorpe says ICER set a price for the device based on payers' budget limits but failing to take into account data that demonstrate its ability to reduce hospitalizations. It makes no sense, according to Thorpe, to determine the value of treatments and devices without considering the value to the people they will actually treat.

Indeed, both patient advocates and drug companies have pushed back against insurers' efforts to mitigate rising drug costs through a campaign called Cap the Copay. Yet as prices rise, payers continue to shift the costs onto consumers in order to keep premiums low.

To learn more:
- read the blog post

Related Articles:
Health plan CEOs: Prescription drugs pose major cost concerns
Why payers must focus on paying for value for Rx drugs
Payers, providers push manufacturers toward value-based deals
Patient advocates, drug companies hope to block insurers from lowering drug costs
Insurers increase cost-sharing measures for specialty drugs