The Resurrection of Death Panels

"Death panels" are making a comeback.

About ten years ago, a bipartisan group of legislators led by Alaska Gov. Sarah Palin helped neuter a part of ObamaCare known as the Independent Payment Advisory Board. This 15-member bureaucratic body had been tasked with cutting Medicare costs -- a goal that would have been partially accomplished by rationing care to seniors. Hence the cryptic moniker. The backlash led to explicit language in the Affordable Care Act that any cost savings achieved by this board could not come as the result of denying care.

Today, politicians and patient advocacy groups must redouble their efforts to fight the death panels' reincarnation: The Institute for Clinical and Economic Review (ICER). This Boston-based nonprofit, seeded with nearly $20 million from the left-wing Arnold Foundation, is promoting its framework to determine whether pharmaceutical drugs are valuable enough to warrant government and private health insurance coverage -- decisions that have life and death consequences for some patients. 

In an attempt to cut drug spending, ICER's framework has already been partially adopted by CVS Caremark, one of the biggest healthcare players, the Veteran's Administration, and New York State's Medicaid programMedicare Part D, which covers 43 million seniors, has indicated it might use ICER's approach for its coverage decisions beginning in 2020.

Trying to reduce drug costs is a worthy goal. But not if it is achieved by denying the best care to the sickest and most vulnerable segments of the population. Such a move amounts to a collectivist solution to the problems facing individual patients with rare and chronic diseases across the country. Deeming expensive medicines not valuable enough for coverage is a blunt and crude way to bring down overall prescription drug costs. 

ICER's value framework relies on a controversial measure known as quality-adjusted life years (QALY), which considers treatments' impacts on improving and extending lifespans. One QALY is equal to one additional year of life in perfect health or two additional years of life at 50 percent health and so on. If the cost of a drug exceeds around $100,000 per QALY, then ICER recommends against its coverage. Such analyses give insurers a veneer of scientific credibility to deny drug coverage.

The biggest problem with the QALY framework is the arbitrary value it places on an extra year of life. Where does $100,000 come from? While that number may seem plausible in the abstract, when the life of a family member or friend is at stake it seems appallingly low.

The value of medication "cannot be adequately measured in lung function, life expectancy, or even quality of life," said Dr. William Elder, a cystic fibrosis patient, "but on the meaning of my life. One pill twice a day has enabled me to answer the call to public service as a resident family physician." Dr. Elder was speaking out against New York State's decision to apply ICER's value framework to Orkambi, a breakthrough cystic fibrosis treatment.

The ethical problems associated with QALY are compounded when you consider that some patients will never achieve perfect health. Are the lives of people confined to wheelchairs less valuable under the QALY framework because they will never walk? Or what about the elderly, whose quality of life may never again be ideal? Such vulnerable groups of the population, who inherently receive lower QALY scores, have the most to lose from such value-based limits on care. 

In addition to the ethical considerations, there are also methodological problems with ICER's value framework. For instance, it doesn't seem to reflect the economic realities of U.S. drug pricing which is characterized by high-priced patented drugs and low-priced generics. By only analyzing the patent price of a drug, ICER overlooks the health and societal benefits of these medicines when they become cheaper generics in the years to come. How many popular generics that exist today would have failed ICER's value framework when they were first introduced?

In addition, it’s unclear whether ICER incorporates all the discounts and rebates that are features of the drug distribution system into its analyses to get an accurate representation of the price of drugs. Failing to do so would be like trying to determine whether going to the University of Chicago is worth it just based off the listed tuition price of $62,000 a year, without considering the myriad of scholarships and grants that dramatically reduce that list price.

We can look to the experiences of other Western countries that use value frameworks as a harbinger of what's to come if they're adopted in the U.S. In Britain, the National Institute for Health and Care Excellence (NICE), has denied coverage to medicines that would benefit about 16,000 cancer patients annually. In 2017, NICE denied coverage of a breakthrough cancer treatment known as Nivolumab because it was deemed too expensive relative to its value. By one analysis, the British only have access to two-thirds of new drugs that Americans enjoy. To try to get around the NICE review process, former UK Prime Minister David Cameron created a "Cancer Drugs Fund” to pay for cancer treatments even if they failed NICE's value framework.

Former Major League Baseball pitcher Bob Tufts explains how he was diagnosed with multiple myeloma in 2009, at a time before significant pharmaceutical treatment advances when the condition was killing patients in one to three years. In the UK, his treatment protocol had not been approved because of cost concerns and the lack of evidence that it would extend his life. He says if that system were in place in the U.S., he likely wouldn't be alive today.

There's no question that the cost of prescription drugs is a major concern of patients. Yet for those with rare and chronic diseases, this problem is secondary to maintaining their access to treatments and maintaining a robust research pipeline, which for some is their last hope for a longer life or functional livelihood.

ICER's impact in limiting coverage of new medicines would alter the economics of drug manufacturing which has recently been generating many new treatments for rare diseases. In 2017, the FDA approved 80 new treatments for orphan diseases, each of which affects fewer than 200,000 people nationwide -- up from just two in 1983. If manufacturers can't count on insurers to cover these breakthrough therapies, research, and trials for innovative cures will be thwarted along with the hopes of countless patients across the country.

Clearly there must be some limit on the price of new drugs. In other parts of the economy, prices are set based on a mixture of supply, demand, and what consumers are willing to pay. When it comes to prescription drugs -- a market characterized by patents, desperate patients, and a Kabuki theater supply chain -- these traditional pricing forces are blunted. Yet that doesn't mean that one nonprofit group armed with a Microsoft Excel value model is smart enough or ethical enough to make pricing determinations itself.

No one group should have the power to determine the value of life. Any that does will also hold the power of death.

Terry Wilcox is the executive director at Patients Rising.