Overcoming the Political and Economic Roadblocks Stopping Effective Comparative Drug Evaluation

Transparent comparative evaluations are necessary for determining the relative value of drugs. But, in part because of the resistance of drug companies and payers, stakeholders are finding other tools to help identify the appropriate choices.

It hardly bears repeating: the cost of drugs—and, in particular, specialty drugs—is going up fast. An AARP Public Policy Institute report1 showed the prices of branded drugs increase at nearly nine times the rate of inflation. A Wall Street Journal study confirmed the trend: the top 30 drugs raised prices by 76% from 2010-2014, eight times faster than inflation.2

Absent price controls or maybe a flood of biosimilars (and their wholesale embrace), the only way to slow the otherwise inexorable rise of drug costs, and particularly specialty drug costs, is by narrowing the prescription choices—thus pitting one competitor against another in a contest of value. But doing so, fairly, requires a level of comparative effectiveness research this industry has never seen.

Most of the major for-profit organizations of the medical world have historically resisted objective comparisons between drugs. Drug companies, understandably, don’t like to see their products compared with those of their competitors. Even when a drug is favored in the comparison, whether the FDA will allow the drug’s manufacturer to advertise this fact when it is not in the drug’s label is a legally murky issue, and most drug companies do not want to risk it.

Meanwhile, insurance companies and pharmacy benefit managers (PBMs) would often prefer, in general, not to have their formulary exclusions second-guessed by objective outside assessments of drugs’ relative value. Moreover, these payers often have relatively short, and narrow, metrics of value: PBMs and payers responsible only for the drug benefit (eg, those who manage Medicare Prescription Drug Plans) are less concerned with a drug’s impact on medical costs for which they’re not responsible. Payers who are on the hook for medical costs don’t usually profit—or do not believe that they profit—from drugs whose benefits do not kick in for more than 3 years.

Likewise, important segments of the not-for-profit world do not fully embrace comparative efficacy. Most patient advocacy groups, for example, are primarily concerned with issues of access. And because these groups have the goal of making every treatment option available—arguing, like drug companies, that patient variability requires multiple easy-to-access options—they do not want to provide evidence that certain drugs are less valuable than others, which could, in turn, give insurers a reason not to cover the less valuable drugs.

Publicly available comparative evaluations do exist. All of the major countries in the European Union have health technology assessment organizations and more or less explicit processes that specifically compare the relative value of different therapeutic options. But, so far, the United States has been stubbornly resistant.

The US government should be conducting comparative evaluations—after all, they’re footing a huge chunk of the drug bill—but their value-assessment organization, Patient-Centered Outcomes Research Institute (PCORI), is not allowed to consider cost in its comparative effectiveness evaluations.3 And because value equals benefit minus cost, eliminating cost from the equation eliminates any useful assessment of value.

To be fair, the most accurate comparative evaluations generally require data that doesn’t always exist: head-to-head trials of drugs within the same patient populations. But no one expects such trials to pour out of the pharmaceutical industry—there is simply too much to lose from an unfavorable outcome. Most famously, Bristol-Myers Squibb pitted its LDL-C reducer, Pravachol, against the more powerful Lipitor to prove that its drug was no worse on the endpoints that mattered most: preventing deaths and heart attacks. But the so-called “Prove-It” trial in fact showed that Lipitor was better.4 Few of Bristol’s competitors missed the lesson of this incident.

In the absence of gold-standard data—but with economic pressures increasing—new evaluators are stepping into the breach. Oncologists, in particular, are hearing from patients that they cannot afford the cost of their medications and want alternative approaches to treatment decisions that take economic factors into consideration. That is one big reason why the American Society of Clinical Oncology (ASCO) came out with its Value Framework this summer (www.asco.org). However, by sidelining cost considerations, the framework does not help enough with the value equation, and it requires drugs to have been trialed against each other before they can be compared—limiting the framework’s utility. The National Comprehensive Cancer Network (NCCN) promises to do better: its own offering, which debuted in October, uses “Evidence Blocks” to assign scores for each of five measures—price, effectiveness, safety, quality, and consistency of clinical data—to each treatment for a particular cancer type.5

Other groups are going beyond oncology. The Institute for Clinical and Economic Review (ICER) is issuing reports on “new drugs that have the potential to significantly change patient care and health system budgets,” providing a full analysis of the drug’s comparative effectiveness, cost-effectiveness, and potential budget impact.6 My own company, Real Endpoints, offers a tool called RxScorecard that scores all marketed and pipeline drugs for a specific indication on 15–40 “elements of value,” including those related to efficacy, safety, adherence and economic value (www.realendpoints.com/our-businesses/rx-scorecard). Peter Bach, MD, Director of the MSKCC Center for Health Policy and Outcomes, built a tool called DrugAbacus (www.drugabacus.org) that allows users to compare the price the company charges for an oncologic to a price based on user-defined values–the “Abacus Price.” (Full disclosure: the tool is based on RxScorecard technology, and Real Endpoints worked with Dr. Bach to build it).

In short, the drug ecosystem will soon have a variety of resources that will allow stakeholders to make evidence-based judgments about drugs that have not been tested against each other. But the question that remains is whether stakeholders will use these resources.

Comparative evaluation will create winners and losers among drug companies—with winners taking market share from losers. That’s terrific if you’re on the winning side, but most company portfolios have representatives on both. Will winners embrace comparative evaluation, knowing that their next offering might not be so fortunate?

Likewise, payers will have to become more public about the methods behind their decision-making—and that could become uncomfortable. Imagine that a public evaluation of competitive drugs shows big clinical or cost advantages for one product over another. If an insurer decides, according to its financial self-interest, not to cover the better drug because its benefits don’t materialize within the membership life of the beneficiary, or because its rebate is smaller than an inferior competitor’s, will they find themselves on the front-page of the local paper? Should they support the process that lands them there?

Meanwhile, I suspect the US Congress will support comparative evaluations that include cost only if the public forces it to do so. And maybe it will: a Kaiser Health Tracking poll7 showed that people are plenty unhappy with existing drug costs: 86% of respondents think that drug companies should be forced to release information on how they set prices, and 83% think Medicare should be allowed to negotiate drug prices.

Physicians, on the other hand, will not present an obstacle to the acceptance of comparative effectiveness. More and more of them are employees of health systems or assume some risk for the cost of care they provide. In either case, they’ll want to be more aware of the cost–benefit trade-offs of the different therapies.

Increasingly, patients will want information about the comparative effectiveness of different treatment options—granted that it can be presented clearly and perhaps in consultation with a physician.

But in terms of real clout, the swing vote on this issue belongs to employers. For one thing, they have an economic incentive to find the most cost-effective drugs for their employees; unlike drug companies and, sometimes, insurers, PBMs, and specialty pharmacies, they do not make any money from expensive drugs. Employers are also likely to view drug value more holistically. For example, they appreciate the long-term benefits of a therapeutic, because employees stay with an employer a lot longer than they stay with an insurer. They are also likely to favor a drug that gets an employee back to work sooner. Thus, they would be please with a metric documenting savings over a period of 10 years (vs only 3 years for most payers), of providing reduced absenteeism (which is meaningless to most payers who don’t also sell disability insurance), or of increasing productivity.

The problem is that drug-value assessment hasn’t been the business of most employers. It is complex and requires specialized expertise; that is why employers involve payers and PBMs. If, however, employers had external, objective and understandable drug evaluations with which they could audit their vendors’ choices—to make sure that their PBMs and insurers were choosing the appropriate drugs—the whole process of decision-making could change. Transparency, not opacity, would rule.

The usual rules of supply and demand haven’t worked in American healthcare for so long because the ultimate payers for healthcare—employers, government, and patients—have, for various reasons, abdicated their decision-making authority. The federal government—the largest payer—has, for political reasons, avoided the issue. But patients and particularly employers, appropriately equipped and attuned to the issue, can now step into the breach. If they do, and if they are armed with the informational tools they need for rational decision-making, we can expect the healthcare market to look a lot more like any other business. 

For another perspective on this issue, read the Counterpoint, "When Determining Value in Cancer Care, Don't Forget the Patient," by Joan S. Mclure, MS, and Al B. Benson III, MD.


1.    Schondelmeyer SW. Rx Price Watch Report: Trends in Retail Prices of Specialty Drugs. AARP Public Policy Institute. www.aarp.org/health/drugs-supplements/info-08-2010/rx_price_watch.html. Updated November 2015. 

2.    Walker J. For Prescription Drug Makers, Price Increases Drive Revenue. Wall Street Journal. http://www.wsj.com/articles/for-prescription-drug-makers-price-increases-drive-revenue-1444096750. Published online October 5, 2015.

3.    Neumann PJ, Weinstein MC. Legislating against use of cost-effectiveness information. N Engl J Med. 2010;363:1495–1497.

4.    Cannon CP, Braunwald E, McCabe CH, et al. Intensive versus moderate lipid lowering with statins after acute coronary syndromes. N Engl J Med 2004; 350:1495-150.

5.    Hagen T. NCCN strives to control cost of cancer drugs with new evaluation framework. Oncol Business Manage. Published online August 25, 2015. http://www.onclive.com/publications/oncology-business-news/2015/September-2015/nccn-strives-to-control-cost-of-cancer-drugs-with-new-evaluation-framework.

6.    Instititue for Clinical and Economic Review. ICER launches new drug assessment program with $5.3 million award from the Laura and John Arnold Foundation [press release]. Institute for Clinical and Economic Review; July 21, 2015. http://www.icer-review.org/icer-ljaf-drug-assessment-announcement/.

7.    DiJulio B, Firth J, Brodie M. Kaiser Health Tracking Poll: August 2015. The Henry J. Kaiser Family Foundation website. http://kff.org/health-costs/poll-finding/kaiser-health-tracking-poll-august-2015/. Published online August 20, 2015.