About ICER

What is ICER?

An organization most patients never heard of is now hard at work determining whether recently approved drugs for serious and often life-threatening diseases should be covered by private health plans and made available to patients.

Called the Institute for Clinical and Economic Review (ICER), this Boston-based institute describes itself as “a trustworthy, independent source to help assess how valuable a new drug really is.” Yet, ICER has come under increasing criticism due to the methods it uses to decide the “value” of new medicines, and its ultimate purpose of limiting the use of drugs patients and clinicians need.  The following explains ICER and its increasing role in determining what medicines are available to Americans with rare conditions and chronic diseases.

ICER Explained

Established in 2007 according to the Boston Globe,[1] ICER is a non-profit organization largely funded by the health insurance industry and run by Steven D. Pearson, MD, an internist with connections to the UK’s National Institute for Health and Care Excellence (NICE). Unlike the way medicines are covered in the U.S., NICE applies a cost-effectiveness threshold when assessing the “value” of all new therapies, which has kept many of the newest cancer drugs off the market in the UK due to their cost. As a result, the policies of NICE have led to the UK having the poorest overall cancer survival rates in Western Europe.[2]

For almost a decade, ICER existed quietly analyzing the cost effectiveness of various medical tests, treatments and procedures. However, this changed in 2015 when the organization received a $5.2 million grant from the Laura and John Arnold Foundation[3] and began what it calls the “Emerging Therapy Assessment and Pricing Program,” a systematic program to develop “value-based price benchmarks” for recently approved drugs, such as breakthrough immunotherapy treatments for certain cancers. Once these “value-based” assessments are published, insurers can use ICER’s findings as the evidence to restrict access to these medicines or to refuse to cover them altogether.

Since announcing its Emerging Therapy Assessment and Pricing Program, ICER has moved forward rapidly with plans to issue value assessments for newly available treatments for 15 to 20 serious diseases and rare disorders by the end of 2017. This includes finalizing reports in 2015, which conclude new medicines for congestive heart failure and hypercholesterolemia (very high blood cholesterol) place an “excessive burden” on the health system. At the end of 2015, ICER also determined that the first interleukin-5 (IL-5) inhibitor approved for severe, breakthrough asthma attacks is not worth the cost to health plans.

Now, ICER has set its sights on recently approved cancer therapies, starting with three drugs approved in 2015 for multiple myeloma, a rare and incurable blood cancer that affects the plasma cells and causes such serious problems as anemia, bone fractures, nerve and kidney damage, skin lesions and an impaired immune system.  Although these drugs are for patients whose cancer has become resistant to earlier treatments and need new options to extend their lives, ICER’s latest report, Treatment Options for Relapsed or Refractory Myeloma: Effectiveness, Value and Value-Based Benchmarks, concludes that: “the estimated long-term cost-effectiveness of these regimens exceeds commonly-cited thresholds.” Decoding ICER-speak, this means ICER doesn’t consider these life-saving myeloma drugs “worth” the cost to health insurers.

Later in the year, ICER will publish similar evaluations of new treatments for non-small cell lung cancer and multiple sclerosis and it is likely a number of novel therapies for other cancers and hard-to-treat diseases will follow.  

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[1] Boston Globe. “Boston Watchdog Takes Aim at Rising Drug Prices.” September 22, 2015.
[2] Rossi S, Baili P, et al. “The EUROCARE-5 study on cancer survival in Europe 1999–2007: Database, quality checks and statistical analysis methods.” European Journal of Cancer. October 2015. Volume 51, Issue 15, 2104–2119
[3] Laura and John Arnold Foundation press release. “ICER launches new drug assessment program with $5.2 million award from the Laura and John Arnold Foundation.” July 21, 2015.

What About ICER’s Funding?

In reports and press releases, ICER states that the organization is funded through grants, contracts and unrestricted gifts. Besides the $5.2 million grants from the Laura and John Arnold Foundation, ICER receives funding mostly from sources associated with the health insurance industry and large health care systems, such as Blue Cross Blue Shield of Massachusetts, Blue Shield of California Foundation, California Health Care Foundation, Harvard Pilgrim Health Care, New England States Consortium Systems Organization (NESCSO), and Partners Healthcare.

How ICER Works

How exactly does ICER measure the value and affordability or new medicines? Using a process similar to the UK’s NICE system of evaluating drugs, ICER employs a two-step process to determine what the organization calls the “health system value” of recently approved treatments.

The first step in ICER’s process is determining the so-called “care value” of new therapies by assessing both the costs and benefits associated with these medications. Here, ICER compares the cost effectiveness of new medicines to the oldest and cheapest therapies. Then the organization decides on the new drugs’ value on the basis of its budget impact and cost per quality-adjusted life-year (QALY), a measure that places a price tag on one year of a person’s life. After making these calculations, ICER takes into account such factors as the severity of the disease and the availability of alternative therapies.

The second stage of evaluation is to determine the “health system value” of new treatments, which is ICER’s judgment of the affordability of the medications to health plans. Here, ICER calculates a cap on the price of new drugs based on the belief that total drug spending should grow no more rapidly than the rate of the Gross Domestic Product (GDP) plus one percent – regardless of the clinical benefits to patients.

Not surprisingly, health economists and patient advocates have major concerns about ICER’s approach. One is that ICER treats health as a commodity and devalues the lives of patients with serious diseases, who are more expensive to treat.

Another serious criticism is that ICER defines “value” solely on the basis of the short-term costs of new treatments to payers and does not consider the longer-term health outcomes achieved – such as extra years of life, higher quality of life and fewer costly hospitalizations, invasive medical procedures and doctor’s visits per dollar spent.

As such, ICER is ignoring the findings of numerous scientific studies and reports, including a recent assessment by the Commerce Department’s Bureau of Economic Analysis (BEA). Applying 2015 data on the measurable value of innovative medicines, BEA concluded that “the net value of treatment has grown substantially, consistent with medical technology, leading to better health outcomes at a lower cost per patient.” Between 2000 and 2010, the report found an increase in positive health outcomes from treatment with new therapies in 20 of the 30 chronic diseases studied.[1]

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[1] Highfill T, Bernstein E. “Using disability adjusted life years to value the treatment of thirty chronic conditions in the U.S. from 1987-2010.” BEA Working Paper [WP2014-9])

Use of the QALY 

What is of special concern to patient advocates is ICER’s use of a measure called the “Quality Adjusted Life Year” or QALY to decide which treatments are “worth” the cost to the health system. Drugs that exceed the QALY threshold are considered too expensive to be used. 

What makes ICER’s use of the QALY so disturbing is how the organization places a dollar amount on healthy people and those being treated for cancer and other life-threatening illnesses. Under ICER’s methodology, a healthy person has a QALY score of 1.0 while a person with a serious disease will have a fraction of this score, meaning their lives are not valued as highly.  In the case of multiple myeloma, ICER used QALYs to devalue the life of patients to as low as 3/5 of a healthy person. Not only does this approach put a price tag on human life but it can result in the inappropriate rationing of care.

It is for this reason, according to a white paper issued on May 27, 2016 by the Alliance for the Adoption of Innovations in Medicine (Aimed Alliance), the U.S. Congress added language to the Affordable Care Act (ACA) prohibiting the use of QALYs in the Medicare program. The paper, entitled Institutional Health Care Rationing Ignores Patients, Undermines Progress, and Leads to Deterioration of Care, attributes this action to “the long-standing concern that QALYs can lead to discrimination on the basis of age and health status, unfairly favoring younger and healthier populations.”

Additionally, the European Consortium in Healthcare Outcomes and Cost Benefit Research ("ECHOUTCOME"), a project of the European Commission, looked at how the UK was using the QALY to make decisions on cancer and said: “The research provides robust scientific evidence that QALYs produce hugely inconsistent, wrong results on which important decisions are being made. Agencies such as NICE should abandon QALY in favour of other approaches.”[1]

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[1] Globe Business Media Group. “NICE methodology criticised by the European Commission's ECHOUTCOME.” March 26, 2013.

Knowledge Is Power

Understanding ICER and its plans to decide on the “value” of newly available treatments for many cancers and other serious diseases in the near future, patient advocacy organizations and professional societies will be in a better position to make their voices heard – both to ICER and policymakers. As such, this portal will serve as a repository for papers, reports, comments and commentaries on ICER’s value frameworks so advocates will have readily available information to take action. ICER needs to know that innovative medicines provide increasing measurable value to patients, society and the U.S. health care system and access to these therapies should not be denied. 

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[1] Globe Business Media Group. “NICE methodology criticised by the European Commission's ECHOUTCOME.” March 26, 2013.

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