Peter Roff, 9/30/2016 [Archive]

Drug Price 'Watchdogs' Need More Scrutiny

Drug Price 'Watchdogs' Need More Scrutiny

By Peter Roff

The effort to reform America's healthcare system has been focused for too long on the need to keep costs down rather than to improve the quality of care while putting the needs of patients first. That's because the people who are paying the bills ---- e.g. the insurance companies and the government ---- have been the ones calling the shots.

How they come up with the formulas they use to determine which prescription drugs will be covered by insurance is, as the man once said, a mystery wrapped inside a riddle bound up by an enigma. Rather than simplify the system everyone is gaming it, figuring out how to make up on Tuesday what was lost on Monday.

Meanwhile, patients suffer. Consider the drug formulary setting system, often referred to as the "black box" out of which come decisions about which prescription medications insurers will cover. Even a reasonable explanation of how it works is overlaid with so much gobbledygook that, as the Harvard Business Review put it, "the average formulary decision-making process would hardly pass scientific muster."

What is left largely unexamined is the way non-profit social justice groups and so-called independent consultants have co-opted the process, taking on an outsized role leading to outcomes adverse to quality patient care.

One tactic they've adopted is to release economic impact reports on medications the Food & Drug Administration has newly approved for use, declaring prices are too high and calling for discounts of up to 94 percent. In doing so, groups like the Massachusetts-based Institute for Clinical and Economic Review (ICER) are providing support for insurance companies and pharmacy benefits managers looking for ways to get out of paying for their customers' treatments.

ICER promotes itself as a "drug price watchdog." It employs analysts and consultants to develop ways to suggest with authority that new-to-market breakthrough drugs are not efficacious enough to warrant inclusion on the list of covered pharmaceuticals, or that additional hurdles like pre-authorization (a practice that requires doctors to vet their prescription decisions with insurers first) be put into place. Much of the money to manufacture these reports comes from the insurance industry.

ICER has received support from 12 insurance companies, their foundations, or insurance trade associations including United HealthCare, the AETNA Foundation, and America's Health Insurance Plans, or AHIP. One year, a single grant from the Blue Cross Blue Shield Foundation of California accounted for two-thirds of the organizations total budget.

The idea these so-called independent voices are being rewarded with the financial support of those in whose economic interests they advocate seems clear. Steve Pearson, ICER's president, used to work for the AHIP, the health insurance industry's lobbying arm in Washington. The linkages are there to be found by anyone who cares to look.

Remember, just because a drug is not listed on a formulary doesn't mean a physician can't determine it is medically necessary and prescribe it. The difference comes when it's time to pay, with consumers footing the bill for 100 percent of the cost of unlisted drugs despite already making ---- in many cases ---- astronomical co-pays and premium payments. Even if a drug is listed, there are a number of tools still available to limit patient access.

Just ask Christian Jacobs, a 24 year old with a rare genetic disorder of inheritable high cholesterol. According to the Associated Press Christian "was shocked when his insurance provider, UnitedHealth, rejected his doctors' prescription for Repatha [a breakthrough drug that's been heavily criticized by ICER reports]. ... Jacobs said UnitedHealth recommended he continue his current drug regimen to see if it lowers his cholesterol. He is appealing the decision."

These short-term maneuvers, supported by narrow "value framework" assessments from ICER and others view breakthrough medical treatments through far too narrow a lens for patients and the healthcare system writ large. As Dr. Scott Gottlieb has written, "The high cost of developing innovative medicines translates into high retail prices. This is a challenge for our healthcare system. But the cost of disease progression, and the ensuing disability, can far outweigh the cost of effective management with some of these drugs. Many newer medicines are more targeted to these diseases, and far more effective."

One reporter called ICER the "de-facto arbiter of the nation's medicine chest" last year, and the groups influence has only grown with each passing day. Profits of insurance companies and PBMs have grown as well, even as patient access to medicine shrinks and further investment in new medical innovations is disincentivized.

It's time for the media and the public to stop swallowing the statements of "independent" groups whole without questioning their funding and motivations. Patients deserve better.


© 2016 Peter Roff. Distributed exclusively by Cagle Cartoons newspaper syndicate.

Roff is a former senior political writer for UPI and a well-known commentator based in Washington, D.C. Email him at

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