Boston drug price watchdog criticized for ‘one-size-fits-all’ approach

Steven Pearson runs the Boston-based Institute for Clinical and Economic Review.Craig F. Walker/The Boston Globe/Globe Staff

A Boston-based watchdog group uses a “one-size-fits-all” approach to determine fair prices for prescription drugs, a mind-set ill-suited for a growing wave of expensive medicines that treat rare diseases, according to a new report by a libertarian-leaning think tank.

The Pioneer Institute report challenged how the nonprofit Institute for Clinical and Economic Review, or ICER, gauges what drugs should cost. The influential watchdog’s real agenda, the Pioneer Institute said, is to build pressure on drug firms to cut prices.

“ICER’s continuing negative reviews of rare disease drugs seem to indicate that their goal is not to accommodate the unique contextual challenges of rare disease therapies but simply to push their prices down,” said the study written by William Smith, a visiting fellow in the life science at Pioneer, which is also located in Boston.

Smith is a former longtime vice president at Pfizer, the New York-based drug giant, which has more than 2,100 employees in Massachusetts. He also worked for prominent Republican politicians, including governors William F. Weld and Paul Cellucci and President George H. W. Bush.

A spokesman for ICER said the report was full of misinformation, including its contention that ICER criticized last month’s decision by Swiss drug giant Novartis to price a revolutionary gene therapy for a rare genetic disease at $2.1 million.

In fact, although Zolgensma bears the highest price tag of any medicine ever, ICER said the drug appeared to be worth it. Zolgensma is a one-time, life-saving treatment for spinal muscular atrophy, the leading genetic killer of infants, and the Food and Drug Administration approved an expanded label to include babies who tested positive in genetic screening but don’t yet show symptoms.

“We are ecstatic that such a treatment exists,” David Whitrap, an ICER spokesman and former employee of Boston-based Vertex Pharmaceuticals, said after reading the Pioneer report. “This is precisely the kind of treatment that our health system should be rewarding handsomely.”

The Pioneer report focuses on treatments for rare diseases, which drug makers have in recent years sometimes priced at jaw-dropping, six-figure sums. The federal government gives drug makers generous financial incentives for developing medicines for so-called orphan diseases.

Vertex, for example, has introduced three drugs since 2012 to treat cystic fibrosis, a rare genetic illness that attacks the lungs and other organs. The list prices of those drugs — Kalydeco, Orkambi, and Symdeko — range from $273,000 to $312,000 annually. ICER said last year that Vertex would have to lower its prices by 71 to 77 percent to align their costs with the benefits.

But the Pioneer report said medicines for rare diseases need to be judged differently from most drugs. They face unusually expensive challenges, Pioneer said, including finding enough patients to participate in clinical trials of experimental drugs.

The Pioneer report also takes aim at how ICER measures the value of a medical treatment over time. ICER uses a unit employed by health economists: “quality-adjusted life year,” or QALY. One QALY (pronounced “kwaly”) equals a year of perfect health as a result of a medicine. Zero QALYs equals death.

A medicine that adds a year of perfect health to a life is worth $100,000 to $150,000, the drug-pricing watchdog says, citing data from the World Health Organization and other sources.

Pioneer says ICER’s reliance on the unit is arbitrary.

“ICER’s methodology is, by definition, a ‘one-size-fits-all’ approach that will inevitably fail to keep up with medical science’s understanding of how and why different therapies work differently in different patients,” said the Pioneer report.

ICER was founded in 2006 by Steven Pearson. A physician who completed his residency at Brigham and Women’s Hospital, he spent a year at the
National Institute for Health and Care Excellence, a government agency in the United Kingdom that approves drugs and decides what they should cost.

The group’s researchers spend about eight months studying how well a medicine works and whether it might reduce other health care costs, then publicize their findings in the hopes of getting drug makers to set a fair price.