By Peter Loftus
A Houston philanthropist couple plans to announce Tuesday that
they are providing a $5.2 million grant to a Boston nonprofit, the
Institute of Clinical and Economic Review, to expand the group's
research evaluating whether new drugs are worth their price
tags.
ICER research has already made a mark: Some U.S. drug-plan
managers credited the nonprofit last year with helping them secure
big discounts on expensive new hepatitis C drugs, after ICER
concluded the therapies would only be cost-effective at half their
price.
ICER plans to use new funding from the Laura and John Arnold
Foundation to double its staff and produce more reports suggesting
benchmark prices for up to 20 drugs over two years. The reports
will provide ammunition to drug-benefit plans as they try to
negotiate prices more closely tied to how well drugs work in
patients.
One of ICER's first projects will be to assess a new category of
potent cholesterol-lowering drugs developed by Sanofi SA and
Regeneron Pharmaceuticals Inc., which could strain health-care
budgets if they are taken by millions. A Regeneron spokeswoman said
pricing for the drug, alirocumab, will reflect potential medical
benefits to patients and overall value to health-care systems.
John and Laura Arnold, a former Enron trader and lawyer,
respectively, are the latest to join a growing movement challenging
U.S. drug prices. As prices have soared--some cancer drugs cost
about $150,000 per patient for a one-year supply--insurers, doctors
and hospitals have pushed back, arguing prices should be lower for
drugs that offer modest benefits, or that don't work as well in
certain patients.
Kelli Rhee, the Arnold foundation's vice president of venture
development, said the foundation is backing ICER's research out of
concern that the U.S. spends more on health care than other
nations, but doesn't produce the best outcomes.
"We're concerned about the human and economic impact that our
underperforming system has on our country," she said. Drug pricing
has become "essentially divorced" from the relative benefits of new
drugs compared with existing treatment options, she said.
Mr. Arnold, 41 years old, started an energy-commodities hedge
fund, Centaurus Energy, after Enron's collapse, and retired in
2012. Forbes estimates his net worth at about $2.6 billion; a
spokeswoman for the Arnold foundation declined to comment on the
estimate, and said the Arnolds weren't available for interviews.
Ms. Arnold, 42, previously worked as a mergers-and-acquisition
attorney and as an in-house lawyer for Cobalt International Energy
in Houston.
The Arnolds have signed the "Giving Pledge," a commitment by
wealthy individuals including Bill and Melinda Gates to dedicate
the majority of their wealth to philanthropy. They established
their foundation in 2008, and have largely focused their grants on
areas outside health care, such as projects to improve the criminal
justice system and education.
Health care has been a more recent focus. Ms. Rhee said she
learned of ICER's research on the new wave of hepatitis C
medications, and contacted the nonprofit earlier this year about a
potential grant to help expand the research to other new drugs.
ICER says it receives the majority of its funding from nonprofit
foundations, and some additional money from government contracts,
drug makers and health insurers. ICER hasn't used manufacturers'
funding for drug reviews, and the reviews will now be funded by the
Arnold foundation.
ICER has used manufacturers' funding for other projects such as
developing online training tools for pharmacy students.
ICER is led by Steven Pearson, a physician who lectures in the
population-medicine department at Harvard Medical School.
Dr. Pearson said insurers and pharmacy-benefit managers are
increasingly interested in such research because many were caught
off guard by costs of over $80,000 per patient for the new
hepatitis C drugs, before discounts, from Gilead Sciences Inc. and
AbbVie Inc. "They've got their eyes focused on the horizon more,"
he said.
Drug companies have argued their prices reflect the high cost of
research and development, and the value they provide patients and
the health-care system. Some companies have said they are open to
alternative pricing models that tie payments to a drug's
performance.
Doctors are another important group challenging drug pricing.
Memorial Sloan Kettering Cancer Center in New York recently
launched a website that allows users to calculate how much cancer
drugs should cost based on various factors such as how long they
extend lives.
Real Endpoints, a Westport, Conn., research firm serving
insurers, last year started a subscription service called
"RxScorecard," a system for assessing the value of drugs. It
recently added a review comparing the value of various cholesterol
drugs, including older products like Merck & Co.'s Zetia, as
well as a new drug co-developed by Sanofi and Regeneron,
alirocumab, which could be approved for marketing by U.S.
regulators this week.
Health insurer Blue Shield of California, which has about 3.5
million members, plans to use ICER research to help it decide which
drugs to pay for, and to guide "what kind of target price we should
shoot for in our negotiations with pharma manufacturers," said
Marcus Thygeson, chief health officer. The head of a foundation
affiliated with Blue Shield of California serves on the governance
board of ICER.
Write to Peter Loftus at peter.loftus@wsj.com
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