Impacts of Cost-Effectiveness Assessments on Patient Access in PDAB States

By: Tracy Baroni Allmon, Jennifer Ellis

Prescription Drug Affordability Boards (PDABs) are emerging as a tool for states to address rising drug costs; in some states, PDABs are authorized to create upper payment limits (UPLs) on medications deemed unaffordable. However, the potential for states to set UPLs using cost-effectiveness assessments, such as those from the Institute for Clinical and Economic Review (ICER), raises significant concerns about patient access and equitable care. 

Key Take-Aways: 

  • Several states have established PDABs to control drug costs; some are seeking to do so by developing UPLs for drugs considered unaffordable for patients. PDABs may look to employ cost-effectiveness research to inform the UPL 
  • PDAB’s use of cost-effectiveness research, such as the ICER widely criticized value frameworks, could put treatment access at risk for thousands of patients with ulcerative colitis (UC) in 8 states 
  • In states that may establish a UPL for UC products based on ICER’s approach, 100% of targeted immune modulator (TIM) users—almost a third of all patients with UC—would be at risk of losing access to their treatment  
  • ICER’s reliance on one-size-fits-all metrics—like the quality-adjusted life year (QALY) and equal value of life years gained (evLYG)—ignores the needs and preferences of individual patients and their conditions. These flaws could affect real-world patient access if relied on by state PDABs 

Understanding the Role of PDABs 

Since 2019, 11 states have enacted laws to establish PDABs with a mandate to control drug costs in identified categories. While PDABs in 8 of these states (CO, ME, MD, MN, NH, NJ, OR, and WA) have taken steps to deem what drugs are unaffordable to patients or the state, 4 states further have the ability to set price ceilings on drugs deemed “unaffordable.” These UPLs and how they are set can have broad implications for patients’ access to medicines, including overriding patient-clinician decision-making when determining which medicine is best for individual patients. 

Key Concerns with Cost-Effectiveness Research and PDABs 

As PDABs start evaluating products and setting UPLs, they may look to cost-effectiveness research. However, disability advocates and bioethicists have raised concerns that reliance on cost-effectiveness research—especially when developed using the QALY or similar metrics—would devalue the lives of the disabled, chronically ill, seniors, and communities of color.1,2,3 Still, organizations seeking to influence the cost-effectiveness discussion, such as ICER, have developed value assessment frameworks using the QALY to determine their price recommendation for a product. To assign these metrics, researchers use survey data to quantify a person’s health state, which results in older people and those living with disabilities and chronic illnesses having systematically lower QALYs compared with younger, healthier individuals. Lower QALYs are then used to justify assigning a lower price to a specific therapy.4,5

To address these concerns, ICER created the evLYG to measure quality of life “equally” for everyone, accounting for additional years of life gained via treatment.6 However, the evLYG does not account for health improvements during those years, underestimates the value of treatments that improve quality vs length of life, relies on average estimates based on generic surveys, ignores many factors important to patients, and has been argued to discriminate against certain populations.7 Though some proponents encourage evLYGs as a work-around to QALYs, should they be prohibited by law, these attributes of both evLYGs and QALYs make ICER recommendations incompatible with good health policy and not appropriate for reference by PDABs. 

Impact on Patients with UC 

PDABs often target high-cost specialty products; drugs indicated to treat autoimmune disorders, including UC, have been frequent targets of affordability reviews. Specifically, TIMs, a class of biologics that treat moderate to severe UC and various other autoimmune and autoinflammatory conditions, have been identified as subject to review by several states. ICER reviewed TIMs in 2020 and asserted that all available treatments should be discounted significantly before they are made available to patients despite stating that “the benefits of TIMs relative to conventional therapy may translate into significant and durable periods of clinical remission, allowing patients to resume normal activities and reducing caregiver impact.”8  This finding was considered controversial, and ICER was criticized for ignoring and disputing, often without proof, many of the concerns raised by key stakeholders during the public comment process. Comments from the University of Minnesota concluded that the “ICER final evidence report for ulcerative colitis, as a recent example, rests on assumptions that are clearly indefensible.”9

Oregon’s PDAB has partnered with ICER for affordability analyses, and other state PDABs may follow suit. Reliance on ICER’s standard value framework and challenged metrics by state PDABs could result in UPLs that put patients with conditions such as UC at risk of losing access to treatment. This analysis aims to assess the impact of the adoption of ICER cost-effectiveness determinations on patient access to UC medicines.  

Case Study: How Could Using ICER Evaluations to Establish UPLs Affect Patients with UC Treated with TIMs? 

UC is a form of inflammatory bowel disease (IBD) affecting approximately 800,000 individuals in the US.10 Moderate to severe UC typically develops in younger patients (between 15-30 years old, though it can develop at any point), and is associated with debilitating gastrointestinal and bowel symptoms, including fecal frequency and incontinence, fatigue, weight loss, pain, and blood loss.11,12 The incidence of UC in communities of color is increasing, with these patients experiencing more severe disease progression and worse health outcomes compared with white patients.13 TIMs are typically used to treat UC when symptoms persist, remission isn’t achieved, or relapse occurs after earlier treatments. There is no way to predict patient success on a TIM or other UC therapy, but remission to prevent long- term complications—spread of inflammation, permanent colon damage, removal of the damaged section of the colon (which does not ensure remission), or infertility—is the goal.14 

Because UC is a challenging condition to treat, and a clear path to remission does not exist, Magnolia Market Access wanted to understand how PDABs’ reliance on ICER assessments could affect patient access to care. Magnolia analyzed in-house claims data for commercially insured patients in PDAB states who were treated with at least 1 of the 8 TIMs reviewed by ICER to estimate how their pricing recommendations could affect patient access in those states.15

Approximately one-fourth to one-third of patients with UC reviewed are on TIMs (Figure 1a).   

If PDABs were to implement ICER recommendations, then 100% of patients with UC on TIMs would be at risk for losing coverage (Figures 1b and 2). The potential for such a sweeping reduction in patient access to TIMs under the ICER recommendations for significant price changes should raise alarm, not only for state PDABs but for providers, patients, and advocacy organizations as well.  

Figure 1b. Percent of UC Patients on TIMs vs Other Therapies, by PDAB State 

Figure 2. Percent of UC Patients on TIMs at Risk for Losing Coverage, by PDAB State

Understanding the Unintended Consequences of Using Cost-Effectiveness Evaluations to Establish UPLs 

If PDABs limit reimbursement for select drugs or implement UPLs based on ICER’s recommendations, insurers may narrow formularies or change benefit design. This could result in unintended consequences for patients on TIMs, resulting in16,17,18

  • Limited access to treatments, with higher out-of-pocket costs 
  • Delayed initiation of treatment due to additional utilization management (UM) requirements 
  • Issues with medication adherence (eg, prescription rationing) 
  • Discontinuation of treatment  
  • Costly outcomes due to clinical worsening 
  • Failure to reach long-lasting remission of UC, causing colon damage, increased hospitalizations, colectomy (ie, removal of part or all of the colon), colon cancer, increased healthcare costs, and/or additional morbidities 

Response to therapies for UC is highly patient-specific; trial and error is required to arrive at the appropriate treatment choice.19 Treatment decisions are made between patients and their doctors based on the patient’s disease history, side effects, and other environmental factors. The use of a value framework that relies on thresholds and standardized metrics, is not disease-specific, and does not account for clinical nuances that could create barriers for providers as they attempt to treat the complexities of UC. PDABs could make pricing decisions that override patient-provider decision-making. 

Additionally, application of ICER-recommended discounts to UPLs by PDABs could have negative consequences for patients using these drugs for other approved indications. ICER’s recommended discounts are based on the cost-effectiveness of the selected TIMs for UC, yet payers’ formularies are generally indication-agnostic. A strict UPL established on an assessment of UC could also affect patients with rheumatoid arthritis, plaque psoriasis, Crohn’s disease, and other conditions outside the scope of the original review. 

Finally, wholesale acquisition cost (WAC) prices reviewed by ICER are not the cost of these drugs to payers. Negotiated plan rebates passed through to plan sponsors are incorporated into premiums and cost-sharing calculations that are not accounted for in ICER’s value framework.   

Evaluating the Risks of ICER Methodologies on Patient Access and Affordability 

The example of UC alone shows how the use of ICER evaluations could affect an entire product class, and should be alarming to providers, patients, patient advocacy organizations, and PDABs who should look to protect the patients in their states. No commercial insurer, including state employee insurance plans, relies on ICER recommendations as the sole basis for price and coverage determinations, and past attempts to do so have proved controversial. Furthermore, federal statute recognizes the problematic nature of value assessment thresholds—such as those used by ICER—and prohibits the use of QALYs and similar metrics “as a threshold to determine coverage, reimbursement, or incentive programs” in Medicare.20,21 PDAB statute in several states also restricts the use of QALYs and similar methodology in performing affordability reviews and/or setting UPLs.22,23,24,25  

Navigating PDAB pricing decisions and ICER methodologies requires understanding policy impacts and real-world patient outcomes. Magnolia Market Access helps stakeholders tackle these challenges with data-driven, patient-focused strategies. Our expertise in claims analysis, policy review, and stakeholder engagement equips clients with strategies to achieve pricing that protects patient access. Learn more about our healthcare policy consulting services and how we can support your efforts in shaping effective pricing frameworks. 

  1. https://www.fightchronicdisease.org/latest-news/health-care-valuations-based-qaly-undercut-fight-against-chronic-disease ↩︎
  2. https://www.als.org/sites/default/files/2022-07/ALS-comments-ICER-FINAL-071322.pdf ↩︎
  3. https://www.cambridge.org/core/journals/economics-and-philosophy/article/abs/costeffectiveness-and-disability-discrimination/96EA141C396CE5665ED0160A729E66F7 ↩︎
  4. https://www.als.org/sites/default/files/2022-07/ALS-comments-ICER-FINAL-071322.pdf ↩︎
  5. https://www.cambridge.org/core/journals/economics-and-philosophy/article/abs/costeffectiveness-and-disability-discrimination/96EA141C396CE5665ED0160A729E66F7  ↩︎
  6. https://www.cambridge.org/core/journals/economics-and-philosophy/article/abs/costeffectiveness-and-disability-discrimination/96EA141C396CE5665ED0160A729E66F7  ↩︎
  7. https://pubmed.ncbi.nlm.nih.gov/37961908/  ↩︎
  8. https://icer.org/wp-content/uploads/2020/08/ICER_UC_Evidence_Report_091120-002.pdf ↩︎
  9. https://pubs.lib.umn.edu/index.php/innovations/article/view/3330   ↩︎
  10. Datamonitor. Ulcerative Colitis Epidemiology Datapack. 2024. ↩︎
  11. Rubin DT, Ananthakrishnan AN, Siegel CA, Sauer BG, Long MD. ACG clinical guideline: ulcerative colitis in adults NIH external link. American Journal of Gastroenterology. 2019;114(3):384–413. doi:10.14309/ajg.0000000000000152 ↩︎
  12. Baker DM, Folan AM, Lee MJ, Jones GL, Brown SR, Lobo AJ. A systematic review and meta-analysis of outcomes after elective surgery for ulcerative colitis. Colorectal Dis. 2021;23(1):18-33. ↩︎
  13. Barnes EL, Loftus EV, Kappelman MD. Effects of Race and Ethnicity on Diagnosis and Management of Inflammatory Bowel Diseases. Gastroenterology. 2021;160(3):677-589. ↩︎
  14. Baker DM, Folan AM, Lee MJ, Jones GL, Brown SR, Lobo AJ. A systematic review and meta-analysis of outcomes after elective surgery for ulcerative colitis. Colorectal Dis. 2021;23(1):18-33. ↩︎
  15. Analysis utilized Magnolia Market Access’ Data Repository for Innovation and Value Evidence (DRIVE), which includes in-house open claims, closed claims, and social determinants of health (SDOH) data from January 2021 to December 2023.  ↩︎
  16. https://www.cambridge.org/core/journals/economics-and-philosophy/article/abs/costeffectiveness-and-disability-discrimination/96EA141C396CE5665ED0160A729E66F7 ↩︎
  17. Gordon JP McEwan PC, Maguire A, Sugrue DM, Puelles J. Characterizing unmet medical need and the potential role of new biologic treatment options in patients with ulcerative colitis and Crohn’s disease: a systematic review and clinician surveys. Eur J Gastroenterol Hepatol. 2015; 27 (7): 804-812.doi 10.1097/MEG.0000000000000378 ↩︎
  18. Volk N, Siegel CA. Defining failure of medical therapy for inflammatory bowel disease. Inflamm Bowel Dis. 2019; 25 (1): 74-77. doi: 10.1093/ibd/izy238 ↩︎
  19. Gordon JP McEwan PC, Maguire A, Sugrue DM, Puelles J. Characterizing unmet medical need and the potential role of new biologic treatment options in patients with ulcerative colitis and Crohn’s disease: a systematic review and clinician surveys. Eur J Gastroenterol Hepatol. 2015; 27 (7): 804-812.doi 10.1097/MEG.0000000000000378 ↩︎
  20. Volk N, Siegel CA. Defining failure of medical therapy for inflammatory bowel disease. Inflamm Bowel Dis. 2019; 25 (1): 74-77. doi: https://doi.org/10.1093/ibd/izy238. (May 9, 2024) (value assessment prohibition codified at 45 CFR 84.57), HHS Final Rule, 89 Fed. Reg. 37522 (May 6, 2024) ↩︎
  21.  Social Security Act § 1882(e) ↩︎
  22.  ORS 646A.694(4)(a) ↩︎
  23.  CRS 10-16-1407(4)(a) ↩︎
  24.  RCW 70.405.050(3) ↩︎
  25.  Minn. Stat. 62J.92 subd. 1(c) ↩︎