Unsupported Price Increases: A New Focus for ICER

February 6, 2019

Among the new acronyms watch is UPI, or unjustified price increase, recently coined by ICER as part of its new workstream to explore price increases for both branded and generic drugs in the US.

Every day in the pharmaceutical industry seems to bring a new acronym; a new one to watch is UPI, or unsupported price increase. The US-based not-for-profit, the Institute for Clinical Effectiveness Review (ICER), has coined the acronym as part of its new workstream to explore price increases for both branded and generic drugs in the US.

Responding to policymaker requests

ICER has set out details on their approach to their work on UPIs and published a draft protocol.  ICER make it clear that it has been asked about the issue of price increases by state policymakers, and note that states including California and Vermont have laws to track substantial price increases. Those laws also include the option for manufacturers to share information to justify increases that go beyond certain thresholds.

Planning a UPI report is also another way that ICER is marking itself out from other agencies, including internationally renowned health technology assessment agencies like the English National Institute for Health and Care Excellence (NICE). It’s not just doing a US cost per Quality Adjusted Life Year (QALY) analysis on selected drugs or even setting out benchmark prices to hit cost effectiveness thresholds; it’s going even further and adding it’s analysis into a hot topic for policy debate and law making. That illustrates an ambitious agenda; it’s hard enough to take a proper look at a new drug in isolation, let alone tackle pricing trends in a fragmented marketplace like the US.

Defining unsupported

The unsupported part is – naturally – key. There is no doubt that there are price increases, sometimes doubt about the scale (the supply chain is complex and net prices may differ a great deal from gross list prices), and at least for those outside of companies, a lot of doubt about whether the price rises are fair. ICER are taking the view that price increases that don’t reflect new clinical evidence are unsupported.

Stakeholder involvement

In what is a hallmark of ICERs approach they are not doing the work in a darkened room on their own; they have already engaged with multiple stakeholders through an advisory group. That includes drug makers plus patient group representatives, and insurers from both the state and private market. The draft protocol is an output of ICERs work with that group.

A long list to a short list for analysis

The draft protocol sets out the ambition to look at up to 13 drugs with substantial price increases over a two year period. The work can’t go as far as ICER would normally go for a new drug, instead ICER say that they will look at whether or not substantial new evidence exists that could justify the price increase (emphasis from ICER).

A key first step is getting together price data on a long list of drugs that could be subject to further review; ICER intend to draw on data from SSR Health, LLC, an independent research firm. That data should account for discounts, rebates etc.

A short-listing process will then be undertaken. ICER will look at weighted average cost price changes over the previous two years and weed out those that have not risen by at least or more then two times the rate of medical care consumer price index (CPI). ICER justifies looking at this to place drug price inflation into the broader perspective of inflation in the price of medical care. Sifting in comparison to this inflation rate is an important criterion; it could be interpreted to mean that price rises per se are not the problem, only those that are outstripping inflation generally in health care.

ICERs UPI approach of course ignores the justification for the starting price; the reasoning presumably is because ICERs other drug assessment reports look at that. But the starting point must surely matter in terms of which drugs are really exhibiting unsupported price increases; a stratospheric launch price can only feel more painful as it increases over time for payers.

ICER also intends to work out which price increases have had the biggest impact on US healthcare spending, so sales will be considered too. This will give a top 10 list of drugs to look at.

Somewhat arbitrarily, ICER is allowing for stakeholders to suggest an additional three drugs that wouldn’t drop out of their long list and short-listing process. Public input is sought on which drugs these could be.

The final list of drugs ICER will look at won’t be revealed as their work is conducted. This is because manufacturers have told ICER that it could be stigmatizing; just being on the list may set hares running, and even if subsequently not seen as unsupported, that may be too little, too late.  Manufacturers themselves will hear from ICER if their drugs have been selected and they will be given a copy of a preliminary report and opportunities to get involved. The not-yet-compiled list has already been described as the ‘list of shame.’

Companies whose drugs will be looked at can share information with ICER, including any new clinical evidence and other potential justifications for a price increase. That might be, for example, because of changes in the cost of production. It’s a relief to see that ICER has considered the more basic drivers of price and price changes within the protocol; that’s important for balance as companies can and do face shocks in supply that can affect the cost of supplying their drugs.

Looking for evidence to justify price increases

The main stay of the analysis ICER will conduct is to try to find out if there is new evidence available on their short list of drugs. They will focus on the biggest indications for those drugs that might have more than one indication.

The starting point for the clinical evidence and what is ‘new’ will be through looking at what was known at approval. Anything else that comes up through ICERs systematic reviews for the last three years will be scrutinized, alongside evidence that manufactures share with ICER. They can share this under ICERs academic in confidence process, although ICER wants to put as much as possible into the public domain.

ICER won’t just accept any new clinical evidence; it will consider the quality of the evidence and only that which they see as moderate or high quality under the GRADE approach will go on to inform ICERs rating of health benefit using their evidence matrix ratings.

No new clinical evidence or clinical evidence that is of poor quality will result in the drug price increase being classed as unsupported. ICER says that non-clinical rationales won’t be evaluated by ICER but will they will provide such rationales – where supplied by manufacturers – in their report. This is important and signals a boundary for just how far ICER can – or perhaps wants to – go, as pricing is not just a company decision alone, it’s an interplay of production costs, competition, the law, and of course in an increasingly connected world the views and pressures brought to bear in the court of public opinion. Price cuts have happened as a result of public outcry. It also neatly side steps a long running debate on just how prices are set, whether methods that have been used to explore returns are appropriate, and what is a fair rate of return on investment in the context of health care. ICER is right to try to bite off a manageable portion of a bigger debate.

Planning for change

ICER says that it knows things will need to change as they conduct their very first version of what is anticipated to be an annual UPI report. They say that they will make changes if needed, and be transparent about doing so.

First UPI report due in October

ICER has opened up the protocol to public consultation with a deadline of February 13. The first report is expected by October 8. We can expect much debate on the report.


Leela Barham is a freelance health economist and policy expert. She has published in peer-reviewed journals and presented at national and international conferences. She has provided advice to the Department of Health and Social Care on policy on pricing of branded medicines to inform the negotiation of a successor to the UK’s Pharmaceutical Price Regulation Scheme (PPRS), the Voluntary Scheme for Branded Medicines Pricing and Access, as well as worked with patient groups, the NHS, pharmaceutical companies and many others internationally on the economics of healthcare and pharmaceuticals. Contact Leela on leels@btinternet.com