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Value Tools Not in The Insurer Toolkit–Yet

Current versions by ASCO, NCCN, and others may not be right for insurers, but they are eyeing new ways to crunch the numbers for cost and outcomes.

Ed Silverman

How much value can be found in a new crop of value tools?

Over the past two years, the American Society of Clinical Oncology (ASCO) and several prominent organizations have responded to the growing concern over prescription drug costs by developing different ways to assess the worth of new medicines. Yet even as understanding value becomes increasingly important for determining coverage, health plans are shying away from using these new tools.

We know this because Avalere Health consultants recently found that none of 11 plans surveyed use these new instruments, which look at cost and how much benefit drugs are actually providing after their effectiveness, quality of life, side effects, and other factors are included. Most of the plans do not expect to rely on the tools next year, either. In fact, only 9% of the respondents indicated that they were very likely to consider using three of the four value tools. Most of those executives surveyed work as either medical or pharmacy directors, and the health plans they work for cover about one in every 10 Americans, or about 37 million people.

Partly because pharmaceutical companies are pricing new cancer drugs so high, cancer organizations are on the vanguard of these efforts to compute value in an objective way. In addition to ASCO, the National Comprehensive Cancer Network (NCCN) and Peter Bach, MD, at Memorial Sloan-Kettering Cancer Center, have developed value calculators. The Institute for Clinical and Economic Review (ICER) in Boston has also gotten into evaluating pharmaceuticals.

ICER not included

The value-based tools are sometimes held up as a way out of the drug price vortex gripping American health care, but truth be told, Avalere’s findings are not at all surprising.

“Health plans have been in the business of evaluating evidence for medicines for a very long time and established sophisticated systems for doing so,” says Caroline Pearson, an Avalere senior vice president. “And there is some question about the unique role of these frameworks. What is their audience and to what extent have they contributed to decision making? It seems unclear.”

Caroline Pearson

“Health plans have been in the business of evaluating evidence for medicines for a very long time,” says Caroline Pearson, a vice president at Avalere Health.

Indeed, the ASCO and NCCN tools are actually focused on helping physicians and patients jointly make treatment decisions. Both organizations freely admit they did not develop their tools with coverage decisions in mind. And they have limitations, too. The ASCO framework, for instance, only makes comparisons between drugs that have been tested against one another in clinical trials.

“Our tool is not well-suited for health plans,” said Richard Schilsky, MD, ASCO’s chief medical officer. “It’s not a comprehensive assessment or ranking of one drug compared to another.”

Moreover, health plans largely rely on the various compendia when it comes to covering oncology treatments.

Still, the finding that 9% of the plans indicate that they will use a value-based tool next year shows some small measure of acceptance. Ironically, only ICER was shunned completely. ICER has worked hard to attract payers and, in fact, has created waves with its assessments, although its methodology has generated so much criticism that the not-for-profit group has solicited input for making changes.

ICER brushed aside the Avalere results, though, pointing to another survey that was conducted last fall by Dymaxium, a market research firm.

That poll found 46% of payers planned on integrating ICER data into their formulary evaluation process, and three quarters of those queried use ICER as a source of evidence for making pharmacy and therapeutic recommendations. So ICER may have gained some traction, but its long-term role remains undefined. Say a major public payer like CMS were to start applying its assessments to Medicare Part B coverage. If that were to happen, ICER would more likely become a force to be reckoned with, according to Avalere’s Pearson (no relation to ICER President Steve Pearson).

Coming soon

Regardless, it is certainly premature to say that the value-based tools are irrelevant to insurers or that insurers are turning their back on them. One reason is obvious—more information is better than less. Another is that the nature of health care payment is changing, which is forcing payers to look at new ways to assess most everything.

Roger Longman

“The world is evolving toward a value-based system” that might require a much more user-friendly framework, says consultant Roger Longman.

“The world is evolving toward a value-based system, and this will go in different directions,” says Roger Longman, chief executive of Real Endpoints, a consulting firm that helped Memorial Sloan-Kettering develop its Abacus value tool.

One possibility may involve placing more financial responsibility on providers to evaluate both clinical and economic considerations. Both providers and insurers are hiring so-called pathway companies to develop rulebooks for therapeutic choices. And eventually, indication-specific pricing and outcomes-based contracting will become more commonly adopted, which means yardsticks will be needed to be able to measure value.

“Some of this will also require a much more user-friendly framework that allows for specific decision making, and I don’t think the current frameworks do that yet,” Longman says. “But regardless of the scenario, these tools create a kind of transparency, which is another redeeming factor.”

Ed Silverman founded the Pharmalot blog and has covered the pharmaceutical industry for 20 years.

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