ICER Publishes White Paper on Alternative Models for Pharmaceutical Rebates

—Paper explores how reforming or eliminating rebates may affect drug pricing, patient access, and incentives for future innovation; helps guide policymakers as they consider multiple options, including those recently proposed by the Trump Administration—

BOSTON – March 12, 2019 – The Institute for Clinical and Economic Review (ICER), in collaboration with the Office of Health Economics (OHE), has released a new white paper: “Value, Access, and Incentives for Innovation: Policy Perspectives on Alternative Models for Pharmaceutical Rebates.” The paper outlines the potential advantages and disadvantages of three alternatives to the rebate model that currently drives pharmaceutical price negotiation in the US.

The white paper was developed following a December 2018 meeting of ICER’s membership program, during which leaders from the pharmaceutical and insurance industries convened to share their perspectives on how rebates grew increasingly important for their businesses, the unintended consequences they have had on drug affordability for certain patients, and possible paths forward.

“Under the current rebate paradigm, patients can face significant out-of-pocket burden that is disconnected from the drug’s negotiated price, and stakeholders across the health care system realize that some form of change is both needed and inevitable,” noted Steven D. Pearson, MD, MSc, President of ICER. “However, while it’s conceptually attractive to reform or replace the current system of rebates, the potential advantages of each alternative are coupled with risks for unintended consequences. We found particularly broad interest in entirely replacing rebates with upfront discounts, although it appears to present the greatest risk of market disruption, legal uncertainties, and the requirement for additional processes and technology for passing discounts through the delivery system. Ultimately, any alternative model must accommodate growth in outcomes-based contracts and, most importantly,  maintain drug affordability for both patients and the health system. We hope this white paper provides policymakers with the background necessary to take a thoughtful, careful approach to near-term reform while laying the groundwork for a greater transformation to come.”

The full white paper is available here.

ICER’s Policy Summit and Membership Program

This white paper is a product of the ICER Policy Summit, a key feature of the ICER Membership program, and it was developed in collaboration with leading researchers at the OHE, a not-for-profit organization based in the UK that conducts research on the economics of innovation and the life sciences industry, the organization and financing of health care, and the role for outcomes research and health technology assessment.

The ICER Membership program brings together a small, influential group of evidence leaders from insurers, pharmacy benefit management firms, health technology assessment groups, and life science companies to address key controversies in evidence methods and policy. Working together in a balanced, non-adversarial environment, ICER members gain the skills and insights in evidence policy necessary to strengthen their competitive position in the marketplace.

The December 2018 meeting, where the ideas in the paper were developed, included leaders from 29 different organizations across the pharmaceutical and payer spectrum:

  • Life Sciences Organizations: Allergan, Alnylam, AstraZeneca, Biogen, Editas, Genentech, GlaxoSmithKline, Johnson & Johnson, LEO Pharma, Mallinckrodt, Merck, National Pharmaceutical Council, Novartis, Regeneron, Sanofi
  • Payer Organizations: Aetna, America’s Health Insurance Plans, Anthem, Blue Shield of California, Cambia Health Solutions, CVS Caremark, Express Scripts, Harvard Pilgrim Healthcare, Health Care Service Corporation, HealthPartners, Kaiser Permanente, Premera Blue Cross, Prime Therapeutics, United Healthcare

No assertion, judgment, or recommendation included in the white paper should be viewed as representing the opinion of any participant or their company. ICER alone is ultimately responsible for the final content.

About ICER

The Institute for Clinical and Economic Review (ICER) is an independent non-profit research institute that produces reports analyzing the evidence on the effectiveness and value of drugs and other medical services. ICER’s reports include evidence-based calculations of prices for new drugs that accurately reflect the degree of improvement expected in long-term patient outcomes, while also highlighting price levels that might contribute to unaffordable short-term cost growth for the overall health care system.

ICER’s reports incorporate extensive input from all stakeholders and are the subject of public hearings through three core programs: the California Technology Assessment Forum (CTAF), the Midwest Comparative Effectiveness Public Advisory Council (Midwest CEPAC), and the New England Comparative Effectiveness Public Advisory Council (New England CEPAC). These independent panels review ICER’s reports at public meetings to deliberate on the evidence and develop recommendations for how patients, clinicians, insurers, and policymakers can improve the quality and value of health care. For more information about ICER, please visit ICER’s website.