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Pipes/Winegarden: Global collaboration on reference models will further depersonalize healthcare


Question: What’s worse than government bureaucrats in Washington declaring the value of your medicine? Answer: Bureaucrats from Boston, London, Ottawa and Diemen establishing that value.

Unfortunately, this is not a joke. It is the direction that the Institute for Clinical and Economic Review is pushing our healthcare system.

ICER is a Boston-based private organization that has granted itself the right to declare how much a new medicine is worth to you. This is as troubling as it sounds.

Nevermind that no third party can ever declare what the value of a good or service is to consumers. When those services are something as personal as healthcare, the accuracy of value assessments is worsened, and the problems that can arise from inaccurate valuation studies are heightened.

Ignoring these realities, ICER follows the lead of price control boards in other countries and fills in the missing patient perspective with numbers and equations. All these empirics are supposed to account for the costs associated with diseases, the efficacy of the treatments, and the ability of the medicines to reduce the identified costs.

While the mathematics behind the analyses may be elegant, these valuation studies and reference models are simply incapable of accurately capturing the human element. Take QALYs, or quality-adjusted life years, as an example. A QALY refers to one life year lived in perfect health.

The QALY allegedly accounts for a medicine’s ability to lengthen and improve patients’ lives. But nothing could be further from the truth. A medicine’s value is determined by the dollar cost required to gain one QALY. Problems arise because how do you define a “quality” life? In practice, QALYs are arbitrary, discriminate against older people and people with disabilities — who are often assumed to have lower “quality of life” — and frequently replace the values of patients with the values of the modelers.

Then, there are qualitative issues like pain. Too many patients living with terrible diseases also suffer from pain. The treatment costs of pain may be relatively small in dollar terms, but efficaciously alleviating this pain will create tremendous quality-of-life benefits for patients. Due to the small-dollar costs of pain, the valuation models used by ICER will often undervalue the benefits from pain alleviation, creating a significant undervaluation bias in their results.

Not letting poor results stand in their way, ICER is working collaboratively with price control boards internationally, such as the National Institute for Health and Care Excellence in the United Kingdom, to develop “best practices” for this dehumanizing endeavor. From the perspective of NICE, the group’s purpose is “to share learning about the development of reference models. The reference models span a disease pathway and can be used to assess multiple technologies across the pathway.

The group is also providing a simple way for organizations to exchange information, share developed pathway models, discuss best practice, give feedback, and overcome any technical and administrative issues.”

The problem is that no matter how much you tweak the wrong model, it will never give you the correct answer. The concept that ICER can substitute quantitative analysis for actual human valuation is fundamentally flawed and destined to harm patients.

Unfortunately, this bureaucratic approach to value is gaining traction in the United States. The collaboration between ICER and other price control boards is an attempt to gain respectability where it is unwarranted.

Politicians attempting to link U.S. drug prices to the prices in other countries is an underhanded way to empower price control boards in the United States.

For instance, Sen. Bernie Sanders, I-Vt., has proposed the Prescription Drug Price Relief Act, which would adopt the depersonalized assessments made by the price control boards in five other countries in the United States.

Rather than rely on foreign price control boards, Rep. Jerrold Nadler, D-N.Y., and Rep. Katie Porter, D-Calif., have introduced legislation that may be more accurately titled “the ICER Full Employment Act.” If passed, this bill would require an ICER-like report for new drugs. It would essentially enshrine ICER’s anti-patient methodology and provide an unwarranted endorsement of its results.

The growing influence of ICER and the increasing willingness of lawmakers to codify its anti-patient methodology threaten a patient-driven healthcare system. Cost-effectiveness studies will never accurately estimate the value of drugs to patients. Only when patients are empowered will we know the value of medicines.

Sally C. Pipes is president and CEO of the Pacific Research Institute. Wayne Winegarden is a senior fellow, business and economics, at the Pacific Research Institute.