Every fall, like the ghouls that appear at Halloween, the Institute for Clinical and Economic Review (ICER) releases a report on “Unsupported Price Increases” for prescription drugs. The report is intended to support the narrative that drug prices are “out of control” and that certain health economists, i.e. ICER, need to step in to dictate what drug prices should be.
The problem with this entire exercise is that overall drug prices are either flat or declining and, as the industry-followed policy blog Drug Channels notes, net drug prices have declined for the past four years. Those price declines were driven by huge discounts and rebates given to commercial and government health plans, discounts that totaled $175 billion in 2019.
The well-respected consulting firm IQVIA similarly reported declines in net drug prices for four straight years, providing data indicating that net drug prices declined 2.9 percent during 2020, “the fourth straight year at or below the CPI,” or consumer price index.
The price declines create a vexing dilemma for ICER, whose entire raison d’être is predicated on the assumption that drug prices are “skyrocketing.” What to do? ICER acknowledges this dilemma in their report, admitting that “national figures over the past several years suggest that overall net prices for drugs in the U.S. market have decreased, and even list price increases have not exceeded the broader inflation in the economy.”
Despite their recognition that there is no crisis of drug price increases, they plow ahead. With their annual “Unsupported Price Increases” study, ICER does something entirely misleading in order to mask drug price declines: Cherry-pick the drugs they examined. In the third iteration of the report this year, ICER looked at the 250 top-selling drugs and found that 228 of them did not have significant price increases.
Once they had established that the vast majority of drugs are not seeing price increases, that should have been the end of it. ICER should have concluded that rising drug prices are not a significant policy issue and then moved on to other important issues for patients, such as out-of-pocket costs. Instead, ICER threw out those 228 drugs from its study and only focused on a small number of drugs that had price increases greater than the inflation rate. Presto, drug prices really are skyrocketing!
The media used the ICER report to build the false narrative that drug prices are rising too quickly. For example, take this entirely deceptive headline from The Washington Post, which cited the ICER report: “For insulin and other medications, rising costs aren’t slowing down.”
That is like proclaiming that food prices are “unaffordable” and then searching through the hundreds of products in the supermarket and finding that only salami and buttermilk had price increases above the inflation rate, then issuing a report focused solely on salami and buttermilk. (Of course, this is hypothetical. Food prices across many products are actually going up rapidly.)
Sadly, this is what ICER’s annual “Unsupported Price Increases” study has become: A deceptive report designed to shore up a drug pricing narrative that has collapsed before their eyes.
ICER must continue with these deceptive reports because without ringing an alarm over drug prices, no one would pay attention to them. If drug prices are not rising, why would anyone pay attention to a group that wants to curb patient access to therapies? More importantly, why should health plans heed ICER’s formulary advice and deny life-saving drugs to their patients when the prices they have been paying for prescription drugs have been declining for four straight years?
Given the years-long declines in drug prices, it may be time for ICER simply to pat itself on the back, declare “mission accomplished,” and close up shop.
