CVS Health and the Imaginary Worlds of the Institute for Clinical and Economic Review (ICER)

In August 2018, CVS Health released a position paper detailing policies in place and those being implemented to help reduce the costs of drugs. This paper introduced three new strategies for reducing costs. These are (i) zero out of pocket costs for chronic disease through a preventive drug list; (ii) reducing the launch price through adoption of modeled cost-per-QALY outcomes by the Institute for Clinical and Economic Review (ICER) to guide clients to exclude drugs launched at a price of greater than $100,000 per QALY; and (iii) introducing tools to be used by doctors, pharmacists and consumers to create greater transparency in understanding the real cost of drugs. The purpose of this commentary is to consider the second of these strategies, the application of a willingness to pay threshold as a viable strategy for impacting launch costs. The arguments presented here are that while modeled cost-per-QALY claims are a staple of formulary committee deliberations in many single payer health systems, their adoption by CVS Health fails to take into account not only the imaginary nature of the modeled construct utilized to generate the cost-per-QALY estimate and its shortcomings but the fact that alternative model structures may render invalid the application of willingness-to-pay thresholds. The case is made that CVS Health could adopt a more rigorous process of formulary assessment to support both preliminary assessments of new products and also an ongoing process of formulary review that challenge manufacturers to justify pricing over product patent life. This process should capitalize on the development of formulary evaluation platforms, potentially involving blockchain technology and smart contracting, for therapy interventions in targeted patient populations. Introducing a more rigorous formulary process, in particular the requirement for claims evaluation protocols, will not only assist CVS Health in restraining price increases over the life of the product but, for the first time in the US, put manufacturers on notice that patently unreasonable pricing policies and claims for product performance can be systematically and effectively challenged.