Jeff Sullivan’s Post

Today we released a new report documenting major flaws in the standard math used to calculate the value of medications. This is an urgent problem, because CMS is going to begin negotiating the prices that the government will pay for drugs — and if the agency adopts a flawed methodology to determine the “maximum fair price” of a medication, that could have devastating consequences for patients across the country, both today and in the future. Our report, powered by Darius Lakdawalla and EntityRisk, looked at 20 drugs that had previously been reviewed by the Institute for Clinical and Economic Review (ICER) using the traditional approach to cost-effectiveness analysis. ICER found that only eight of the 20 were cost effective. But updating the math to incorporate widely-accepted components of value while accounting for the fact that drugs go generic and will be used by many future ‘cohorts’ of patients shows that at least 17 of the drugs were cost effective. ICER’s mistakes happen because their model doesn’t accurately reflect the value of drugs to patients and society in the real world. Our report identified three significant failings in that traditional approach, and we showed how to update the methodology to fix them. It’s important to get this right. CMS has indicated that it intends to adopt a form of cost-effectiveness analysis to help set drug prices, and it’s not an overstatement to say that it would be a disaster if the federal government adopted a flawed, out-of-date methodology to determine whether Americans will have access to the medications they need at a low out-of-pocket price. And beyond that, appropriately valuing the medicines of today is critical to the successful development of the life-saving medicines of tomorrow. Read the full report below to learn more about what’s wrong with traditional cost-effectiveness analysis and, critically, how we can fix it: https://lnkd.in/e3ECXJtF

EntityRisk software in action! Our tools can assess multiple dimensions of product value at scale using much improved, cutting edge methods. If you’re planning a product launch - or investing in one - we can help broaden your perspective on value.

Again one reads this sort of technical argument ("my model is better than your model") and wonders: whom is this directed at and to what ends? It's not a bad thing if the ICER.org doesn't have a monopoly on CEA in the US, so good luck to Entityrisk as they pitch an alternative (and a more industry-friendly one, why not?). But does this (or "classic" CEA) actually determine insurance coverage or pricing? In the US, some insurers *say* it does (do you believe them?). Ex-US, some HTA bodies (in the UK, NL, AU etc.) certainly insist on it. But is it true? Assuming a scenario where this "more generous CEA" took hold, would we see more money flowing to more drugs? Not likely, because there is a finite amount of it. Here's a natural experiment: sometimes, the UK or Japanese government squeezes a few percentage points off marketed drugs. Is this because they re-did the math on CEA and found that the drugs have lower value? Or because they need the money? And a thought experiment: say they adopted this new CEA and found that drugs are *more* valuable than they thought. Are they going to increase their drug budget? Don't bet on it. "Value" is mostly a MacGuffin. "Budget" is the real issue. #pricingstrategy #pricing #reimbursement

An interesting addition to the discussion on value or price. An observation is that the buyer defining the cost of a product or service is an interesting starting point. The seller usually wants to dialogue and convince the buyer of increased value. This requires two open and willing parties. The present atmosphere of defensive criticism and law suits against the government in the USA is not the best place to start. Maybe and hopefully the atmosphere will improve. Meantime the best thing pharma and biotech can do is create AND explain meaningful benefits from treatments

Trial volume has grown rapidly, but how has it affected therapy approvals? I saw a recent post about 2022's down year in newly approved drugs. Following my curiosity, I pulled some data from CDER and CBER (Center for drug/biologic evaluation and research) and clinicaltrials.gov. It takes many years, sometimes 2 decades, for drugs to go through clinical trials, become approved, and reach the market. Consequently, we may expect a lag between the trends in these graphs. However, I did not see any correlation. Since recording in the early 2000s, ClinicalTrials.gov has seen exponential growth of trials, but total FDA approved therapies has been stagnant since 2017. Why? I'm not sure, but I wanted to share this data, start a conversation and learn.

Thoughts on this? >> Genentech paves path to increased clinical trial diversity as a ‘business imperative’ >> Comment below! >>> lqventures.com #strategy #competitiveintelligence #marketing #healthcare #productmarketing #biotech #pharmaceutical #pharma

Everyone in healthcare is talking about value-based drug pricing ⚖ Nobody is telling you how to actually assess value. Here are 10 steps you can use to assess a drug’s value: 1. Focus on clinical value first. 2. Determine if clinical trials have demonstrated efficacy over existing therapies. 3. Determine if real-world studies have demonstrated effectiveness over existing therapies. 4. Consider any safety signals that have emerged. 5. Focus on economic value once clinical value has been established. 6. Estimate total lifetime costs of therapy, not just drug acquisition costs. 7. Evaluate total costs in the context of expected health benefits. 8. Weigh other factors such as equity and feasibility of use. 9. Consider patient preferences, values, and priorities. 10. Rinse and repeat as new evidence emerges. Now you have a systematic approach with two advantages: 1. An evidence-based decision-making process 2. Leverage to negotiate with manufacturers Clearly communicate and justify your decisions to prescribers and plan members. Negotiate to ensure that a drug’s price is proportional to the additional value it provides. Use this process consistently to improve health outcomes for your plan members and reduce drug spend. Value on drug spend can be achieved. Are you going to get it? #valuebasedhealthcare #drugpricing #pharmacybenefits

📉 A lot of talk about the Inflation Reduction Act and how it will affect drug prices, but what does IRA mean for the life science sector? 💡 Check out our latest blog post by Alec de la Durantaye and what service providers should consider when thinking about IRA #biotech #pharma #drugprices

Phase 3 in clinical research is where the drug or treatment is tested on a larger group of people to confirm its effectiveness, monitor side effects, and compare it to existing treatments or a placebo. It typically involves thousands of participants and provides more comprehensive data on safety and efficacy. #clinicalresearch #clinicaltrials #cpa #communitypharmacistaid #pharmacy #clinicalstudies #certification #student

Pharma CEOs vs PBMs - The Real Culprits Behind High Drug Prices? 🤔 Recently, top pharma executives were grilled in a Senate hearing about soaring drug prices. Their defense? Pointing fingers at pharmacy benefit managers (PBMs). While it's no secret that drug prices are sky-high, the blame game between pharma companies and PBMs is heating up. Are pharma CEOs shifting blame to sidestep responsibility, or are PBMs the hidden manipulators in this high-stakes game? What's your take on this tug-of-war impacting our healthcare costs? #HealthcareDebate #PharmaVsPBMs #DrugPricing