Controversial drug pricing method gaining popularity

A method to set drug prices that places a dollar value on a year of life, known as quality-adjusted life year, is growing more popular in the U.S., according to The Wall Street Journal.

The QALY method was developed in the 1960s as a strategy to fairly price drugs. It determines a dollar figure on a year of healthy life, calculates how much health a drug gives back to a sick patient, and prices the drug accordingly.

Under the method, one year with perfect health equals one QALY, and one year with a health problem that affects quality of life is less than one QALY. How much less depends on the severity of the health issue.

The Boston-based Institute for Clinical and Economic Review, which advocates for drugmakers to use the QALY method, set a maximum value of one QALY at $150,000 based on various health economics studies into how much Americans are willing to pay for healthcare, according to the WSJ.

Though the method is widely used in countries including Canada, Britain and the Netherlands, it has long been rejected by U.S. drugmakers, which argue it could lead Medicare to refuse to pay for expensive drugs and leave patients without access to new treatments. Some drugmakers also argue the QALY method is too blunt to measure the value of drugs and doesn't take into account a new drug's novelty or its effect on the lives of caregivers.

However, as national debates over how to fairly price drugs continue, insurers and some drugmakers have begun to accept the approach.

Novartis priced its cancer drug, Zolgensma, following ICER's recommendation, and other drugmakers have said they will at least compare their own pricing assessments to ICER's, according to the WSJ.

"People are finding the QALY concept to be more and more acceptable," Troy Brennan, MD, CMO of CVS Health, told the WSJ. "As these kinds of approaches get adopted…pharma will have to change its view on what best pricing is."

Read the full article here.

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