Medicaid Formulary Decisions and the Institute for Clinical and Economic Review: Abandoning Pseudoscience in Imaginary Pharmaceutical Pricing Claims

  • Paul Langley University of Minnesota


Medicaid formulary committees and other gatekeepers face a difficult task. On the one hand they can utilize technical expertise in evaluating the real world evidence for clinical, quality of life and resource utilization claims for competing products while on the other hand they may be asked to assess claims built by simulation models for pricing and product access. A common option has been to take modeled claims from third parties such as the Institute for Clinical and Economic Review (ICER) at face value without challenging the model structure, its assumptions and its incremental cost-per-QALY claims set against competing products or the existing standard of care. Unfortunately, from the available evidence, it seems clear that many formulary assessment groups, last but not least those for whom the ICER modeling claims are targeted, have little if any appreciation of the limitations of ICER modeling. There are two substantive issues: (i) a failure to appreciate the limitations imposed by the standards of normal science for credible, empirically evaluable and replicable product claims and (ii) an understanding of limitations imposed by the axioms of fundamental measurement. In the latter case, a failure to recognize that the quality adjusted life year (QALY) is an impossible mathematical construct (hence the I-QALY). To these limitations should be added the potential for constructing competing imaginary claims. Surprisingly, ICER has provided the ideal opportunity to construct competing claims with the launch in late 2020 of the ICER Analytics cloud platform. Formulary committees and other health decision makers should be aware that claims based on the ICER Analytics platform together with competing lifetime modelled claims all fail the standards of normal science. Factoring these into formulary decisions is not only misguided but may have unintended consequences for pricing and access that may disadvantage significantly patients and caregivers. We have spent too much time debating the merits or otherwise of the I-QALY for targeted patient groups with the parties failing to recognize that the focus on simulated cost-per-I-QALY value assessments is a mathematical folly; I-QALY claims are a chimera. The I-QALY, at long last, should be abandoned together with modelled lifetime simulations. Medicaid formulary decision makes should rethink the required evidence base for formulary decisions and negotiations. Care should be taken to revisit previous negotiations where ICER recommendations have been utilized to support pricing and access.


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Received 2021-01-24
Published 2021-02-16
Formulary Evaluations