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CRITical Thinking is a blog written by staff, directors, and friends of the Collaboration for Research Integrity and Transparency (CRIT), a joint program of Yale Law School, Yale School of Public Health, and Yale School of Medicine. CRIT's mission is to promote health by improving the integrity and transparency of biomedical and clinical research.

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Are Payers Willing to Engage in Evidence-based Coverage Decisions?

August 29, 2017

In June 2017, Yale CRIT hosted an international conference titled “Ensuring Safety, Efficacy, and Access to Medical Products in the Age of Global Deregulation.” The following blogpost is the fourth installment of a blog series with commentaries from the conference participants. The views and opinions expressed in this blogpost are those of the author and do not necessarily reflect the position of Yale CRIT. For more blogposts related to this series, see here or click the tag “YaleCRIT17” below.

My participation in the Yale CRIT conference on the challenges faced in an era of global deregulation of the approval process for medicines was both personally rewarding and eye-opening. Was anything discussed really a surprise to me?  The accelerating trends at the EMA and FDA to open the floodgates, allowing almost anything to pass as “evidence”? No, we all already knew this all too well. The requirement that payers now need to become the de facto gatekeepers by refusing to fund therapies of no material benefit because regulators have abdicated their responsibility? No, this is also abundantly clear worldwide.

The surprise? That some in attendance were optimistic that U.S. payers were up to this task. In my experience, nothing is further from the truth. 

Let’s reflect on the state of the commercial insurance industry. We have relatively few national players, and a trend towards even more consolidation of those. Despite this, there is a decided lack of data and systems integration among them; for example, Wellpoint and Anthem merged in 2004, but full integration was hampered by a myriad of regulatory, legal, and systems hurdles [1]. At least large, national plans have the in-house capacity for some form of health technology assessment and evidence-based decision-making; the smaller regional companies have few if any resources to devote to this task.

Even more vexingly, even when evidence-based approaches are employed, ultimate coverage decisions come down to who is giving the biggest discount or rebate. Consider the case of rheumatoid arthritis (RA); there are loads of available biologic agents for controlling the symptoms of this debilitating disease, yet only two drugs, Humira® and Enbrel®, completely dominate this market. Why? Because their manufacturers offer steep discounts for these drugs in RA and several other inflammatory conditions that they hold indications for. As a result, patients in many plans must try one or both before they can move on to anything else. 

How bad is this chokehold? Consider the comments from a health economist representing the manufacturer of a new biologic at Institute of Clinical and Economic Review’s (ICER) recent meeting on the comparative effectiveness and economic value of RA therapies. For context, his company’s drug outperformed Humira in a head-to-head trial, and he was talking to a health plan medical director: “We could give sarilumab away for free…and I still don’t think you would step people through sarilumab” [2].

If we’re going to ask payers to step into a void left by regulators, they need to rid themselves of perverse incentives and use their leverage to negotiate with a strong upper hand. Let’s also not kid ourselves that Medicaid is somehow immune to the same sorts of incentives—with steep budget cuts in the offing, states may find that evidence-free negotiations are the only way to keep their programming solvent.   

Dan Ollendorf is Chief Scientific Officer for the Institute of Clinical and Economic Review (ICER).

  1. Belloff RF, Wong KM.  Hidden Costs of M & A in a Regulated Market: A Case Study of the Merger of Anthem and Wellpoint Health Networks.  Accessed at: http://www.ism.edu/files/Belloff-Wong-Wellpoint-Merger.pdf, August 28, 2017.
  2. Institute for Clinical and Economic Review.  New England CEPAC Meeting on Rheumatoid Arthritis, March 24, 2017.  Accessed at: https://www.youtube.com/watch?v=3UpN9jXAZUI, August 28, 2017.