Has the Time Come for a US NICE?

Leora Schiff, principal, Altius Strategy Consulting

There is growing discontent among many healthcare stakeholders with the Institute for Clinical and Evidence Review known as ICER, something which may not surprise many TR readers.

Recently, I had the opportunity to moderate a panel on value-based agreements for the CBI/EBD Group Rare Disease Innovation & Partnering Summit in Boston. Among the topics that the panel discussed was the increasing role of health technology assessments (HTAs) in US reimbursement.

Much of the discussion focused on the growing impact of ICER. It was clear that ICER had no fans in this audience of industry professionals and patient advocates. Several patient advocates, in particular, were extremely critical of ICER’s recent report on drugs for Duchenne Muscular Dystrophy (DMD). Their main complaint was that the model was based on inaccurate data regarding the DMD population. They also thought that ICER does not listen to patients, failing to adequately act on patient comments and feedback. A health economist in the audience questioned whether or not any of the ICER reports could pass muster for publication in a peer-reviewed journal. No one came to ICER’s defense.

The biotech community has been critical of ICER for years. Last year, following ICER’s publication of its report on cystic fibrosis drugs, Vertex sent a scathing letter to Steve Pearson, ICER’s president, accusing ICER of using “arbitrary modeling choices” and that its process of evaluation was a “sham” since ICER “presented the final cost-effectiveness recommendations . . . three weeks before the public hearing at which patients, physicians and Vertex were scheduled to present their evidence.”

BIO (the Biotechnology Innovation Organization) has publicly disagreed with ICER’s approach to the Value Assessment Framework that it uses in making its health technology assessments.

Sarepta Therapeutics, the maker of a treatment for Duchenne Muscular Dystrophy, issued a statement in May that blasted ICER’s assessment of DMD therapeutics. Sarepta called ICER’s approach “fatally flawed as it relates to rare and genetic disease”. Sarepta followed up the harsh language with action, saying it has “chosen not to participate in reviews by ICER until it adapts its model to address the inherent limitations and biases that compromise its evaluations of therapies intended to treat patients with serious, rare diseases.”

A few years ago, I wrote an article for TR called “Watching the Watchdog: How Does ICER Determine ‘Fair’ Prices for Drugs?”, in which I  was quite critical of ICER. My main criticisms at the time were ICER’s lack of transparency regarding its models and inputs which made it impossible for other organizations to reproduce its results. I also thought there were questionable assumptions used in its models.

More recently, health economists Peter Neumann and Joshua Cohen of the Center for the Evaluation of Value and Risk in Health at the Institute for Clinical Research and Health Policy Studies at Tufts Medical Center, have also taken ICER to task for its lack of transparency. They also raise concerns about ICER as a private entity making decisions about which thresholds should be used in cost-effectiveness and public and private budget determinations, rather than having the people who are actually responsible for healthcare plans make such decisions.

Why we should care about ICER

Like it or not, ICER has become the go-to source for HTAs for commercial payers.

The Academy of Managed Care Pharmacy (AMCP) conducted a webinar in February on “ICER: Payer perspectives on the use and usage of ICER reports”. During the webinar, the speakers cited survey data on a sample of 614 US payers, integrated healthcare delivery systems and hospitals. 87% of the respondents indicated that they use some form of value framework during their pharmacy and therapeutics (P&T) committee formulary decisions. 76% of the respondents that use value frameworks (predominantly managed care organizations and PBMs) indicated they use ICER reports. These organizations use ICER reports predominantly as a secondary source of evidence, in determining product affordability and in determining tier placement for drugs. Some respondents also use ICER reports to support pricing negotiations.

In addition to commercial plans, ICER reports are also being used by government agencies. Since 2017, ICER has been working with the Veterans Administration to use its HTAs in determining drug coverage and price negotiations.

Why are these organizations turning to ICER for their HTAs?

Historically, payers have used a variety of HTA resources, including reports from the Agency for Healthcare Research and Quality (AHRQ) and Hayes, Inc.  The Blue Cross and Blue Shield Association conducts its own HTAs through its Evidence StreetTM platform. However, these reports provide comparative clinical effectiveness analyses of new treatments. ICER appears to be filling a vacuum, addressing a growing need/desire for cost-effectiveness analyses.

From my own conversations with payers, I have learned that many payers, particularly the smaller regional ones, lack staff trained in health economics and the resources to conduct appropriate health technology assessments. Having a source of free HTA reports would certainly be attractive for them.


There have been many comparisons of ICER to England’s National Institute for Health and Care Excellence (NICE).  Neumann and Cohen point out several similarities between the two organizations (as well as a number of arguments about important differences). The similarities include:

  • Both organizations issue cost-effectiveness analyses using quality adjusted life years (QALYs) to calculate incremental cost-effectiveness ratios which are evaluated against a predetermined threshold for an acceptable additional cost per QALY gained.
  • They both go through a formal report development process in which draft reports are posted for public comment.
  • Both organizations consider the affordability (budget impact) of a technology as well as its cost-effectiveness.

However, ICER is not NICE.

NICE is a special health authority that reports to England’s National Health System (NHS). NICE’s operations are explicitly defined in a formal legal framework that establishes how it will work with England’s Department of Health & Social Care “to serve patients, the public and the taxpayer.”

This contrasts with ICER’s private funding through large grants from the Laura and John Arnold Foundation totaling over $19 million, as well as contributions from health plans, providers and drug manufacturers. While ICER solicits public feedback, and its reports clearly have influence over public and private health spending decisions, there is no formal mechanism for it to be held accountable by public or private organizations, patients and the public.

There are also critical differences in terms of how NICE and ICER function. Let’s start with NICE. In order to make a cost-effectiveness determination for a medical product, NICE will commission an Evidence Review Group (ERG), usually an academic group out of a university such as York or Liverpool, to conduct an evidence review. The ERG submits a report to NICE’s Appraisal Committee (AC); the product’s manufacturer submits its own dossier to the Appraisal Committee. Both reports provide assessments of the clinical evidence, cost-effectiveness and NHS budget impact models. The Appraisal Committee then holds public hearings. Based on the ERG and manufacturer’s submission and the public feedback, the Appraisal Committee then makes a determination of whether or not the NHS should invest in covering the new product as an NHS benefit, which is issued as formal NICE guidance for the NHS. Topics for evaluation are determined either by NICE or by referral from the Department of Health.

Now let’s look at the ICER process. ICER chooses its topics based on its own scan of drugs in the pipeline, suggestions from advisory boards (for non-drug technologies) and public suggestions. ICER will develop a scope for its evidence report, soliciting public comments during the scoping process. ICER also will speak to manufacturers to discuss appropriate comparisons and the current state of the published evidence. ICER will then draft a report which it makes available for public comment. In developing the report, ICER is interested in inputs from manufacturers for ICER’s models which it develops internally or with external collaborators. ICER often requests manufacturers’ unpublished “data on file”, which they are not required to provide. There is a risk here to manufacturers. If the data is provided, ICER decides whether or not to use it and how. ICER is NOT interested in looking at the manufacturer’s own economic models. Following the public comment period, ICER revises its report, which it posts online, followed by a public meeting to solicit feedback. ICER then publishes the final version of the evidence report on its website and publishes a press release summarizing the results.

In effect, ICER is acting like an Evidence Review Group, producing a report that commercial payer organizations will then compare with analyses by product manufacturers. There is no independent arbiter reviewing the two submissions, no transparency and no public accountability of final decisions.

It is important to note that payers are not commissioning ICER for technology assessments; ICER is setting its own agenda. It has also established its own criteria for determining cost-effectiveness and methodology for making assessments.

Does the US need its own NICE?

If ICER is becoming the de facto source of HTAs in the US but healthcare stakeholders such as patients, manufacturers and health economists question the validity of these reports and the accountability of the ICER organization, is it time to consider an alternative – should the US establish its own version of NICE?

The following would argue in favor of the establishment of a US NICE:

  • Payers are clearly going to use HTAs that include cost-effectiveness and budget impact in their evaluation of medical products going forward. It is better to have a source of such HTAs that is accepted as independent and objective by all healthcare stakeholders.
  • Over the past few years, the biopharma industry increasingly has embraced the concept of value-based pricing, with value being determined not just in terms of clinical value but also in terms of the potential to be cost-saving for the healthcare system.
  • Evaluations of potential cost-savings have become important considerations in the development of performance-based agreements between manufacturers and payers.

Assuming that there is agreement that a US NICE should be established, the question is how to do that in order to ensure objectivity and accountability to the American public. Should this be an organization that, like NICE, is accountable to a government agency such as the Department of Health and Human Services?


A potential candidate for such an organization is the Patient-Centered Outcomes Research Institute (PCORI).

PCORI was established through the Patient Protection and Affordable Care Act (PPACA) otherwise known as Obamacare. The purpose of PCORI is to support comparative clinical effectiveness research which it does through grant-funding. [Disclosure: I have served as merit reviewer in PCORI’s granting process. I’m a fan – call me biased.]

PPACA also set up the Patient-Centered Outcomes Research Trust Fund (PCOR Trust Fund). The trust fund receives monies from the US Treasury, the Centers for Medicare and Medicaid trust funds, and PCOR fees assessed on commercial health insurance plans.

PCORI’s research agenda is set by a Board of Governors which includes representatives of all healthcare stakeholder groups: patients, physicians and providers, health insurers, pharmaceutical, device and diagnostic manufacturers and the federal and state government.

So far, so good. However, there are major hurdles in converting PCORI into a US NICE. These hurdles are imbedded in PPACA itself, which prohibits PCORI from using incremental cost-effectiveness ratios (ICERs) “as a threshold to establish what type of health care is cost effective or recommended” and prohibits the federal government from using QALY-based cost-effectiveness analyses “to determine coverage, reimbursement, or incentive programs” under Medicare. As a result, PCORI policy states that “Our founding legislation prohibits us from doing cost-effectiveness analysis.”

If the US government were ever to establish PCORI as its version of NICE, the Affordable Care Act would have to be changed legislatively in order to permit PCORI to conduct cost-effectiveness analysis. Let me rephrase that – Obamacare would have to be revised. Think about that. Given the current political climate, it’s safe to say that this is highly unlikely. However, what the situation will be after the 2020 Presidential election is anyone’s guess.

How I learned to stop worrying and love cost-effectiveness*

Right now, the healthcare industry is in a period of crisis and flux. The system is clearly not working and many patients are being hurt either by a lack of access to care and/or crushing financial burdens. Feelings about drug prices are intensely negative toward manufacturers.  Political discussions on what to do are often heated and not always rational.

Unfortunately, there are no easy solutions – ours is a cobbled-together healthcare system based on decades-old practices and reimbursement processes trying to cope with 21st century technologies (and their associated costs).

The movement from volume to value was an important first step in trying to rationalize the system, but it is only part of a bigger process of moving towards optimized healthcare. We need to get to the point where patients are treated with the best option for them – whether it is a drug or a procedure or a device or maybe nothing at all. Ineffective treatments need to get weeded out of the system. Incentives built into the reimbursement process need to be aligned with choices that make sense for patients, rather than what drives profit for healthcare stakeholders – whether they be payers, providers or product manufacturers.

Going forward, cost-effectiveness analysis is not only going to play a role in determining where health plans allocate limited resources – it could be an essential tool to help us balance the system. We need to understand what works well for a given indication on a population basis and how much it costs the system compared to other, lesser clinical choices.

However, current cost-effectiveness approaches using QALYs fail to truly measure the full extent of benefit that new treatments can bring to healthcare stakeholders. We need cost-effectiveness methodologies that are able to capture a broader range of benefits delivered to the full range of healthcare stakeholders, such as productivity gains and a more expansive definition of quality of life improvements.

Members of the International Society for Pharmacoeconomic and Outcomes Research (ISPOR) have been working on developing such new methodologies that go beyond the QALY. Lou Garrison, Sachin Kamal-Bahl and Adrian Towse have proposed an expanded value framework for cost-effectiveness with a “broader range of elements of value”. Such elements could include the real option value for patients being able to survive long enough to wait for future treatments that can extend their lives or even provide a cure and the potential scientific spill-over effects of a new treatment that provides insights that advance the development of future therapies.

Also, at the patient level, the healthcare system needs to be able to flex so that patients can access what works best for them without being bankrupted in the process. We’re far from that point.

I know that the idea of cost-effectiveness in reimbursement is a scary prospect for many in the biopharma industry, particularly given the many examples of ICER calling out drug prices as being 70%, 80% or 90% too high for the drugs to be cost-effective. For some, wide-spread adoption of cost-effectiveness analyses in reimbursement is seen as a death-knell for the biopharma industry, crushing drug prices, chasing away investors and killing innovation.

However, for some therapies, such analyses have been powerful arguments in favor of their reimbursement and adoption, even given the currently limited QALY methodology. As an example, last year ICER published a report on Genentech’s emicizumab (Hemlibra), a bispecific antibody for the treatment of hemophilia A. ICER found the drug not only improves patient outcomes, it also significantly reduces the need for costly blood and plasma transfusions, making it cost-saving. To quote ICER’s CMO, David Rind, “Emicizumab appears to be a very rare win-win-win in treating a small population of patients who have hemophilia and cannot be treated with factor VIII.”

For drugs to be fairly valued in cost-effectiveness analyses, we need both better methodologies to capture the full spectrum of benefits that innovative therapies provide and a fair, objective and independent arbiter to perform the assessments.

The biopharma industry can continue trying to put a finger in the dike, objecting to the use of cost-effectiveness to determine reimbursement policy. But the water is already leaking pretty fast, with a flood looming on the near horizon.

Alternatively, the biopharma industry can roll up its sleeves and get involved in trying to find a better solution. This means engaging in discussions of how to improve cost-effectiveness methodologies to better reflect a drug’s overall value and how best to develop robust models that are convincing for all stakeholders.

This also might mean calling up your congressman and talking about the virtues of cost-effectiveness.

Leora Schiff is the Principal of Altius Strategy Consulting. She can be contacted at lschiff@altiusstrategy.com.


*For our millennial readers, if you didn’t catch this film allusion, I highly recommend the classic “Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb”.

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