What is an ICER and Why Should You Care?

What is an ICER and Why Should You Care?

The healthcare environment is changing rapidly and at all levels.  Value used to be defined as the number of procedures, products, or patients.  That is no longer the case and the challenge is therefore to define value, particularly where there are existing approaches that are well accepted and reimbursed.

So what is ICER?

It stands for Incremental Cost Effectiveness Ratio.

The goal is to compare the value of a new drug or device to the next best (current) option.  It is not just about cost of the product itself but includes costs of delivering the care, reduction in other costs that would be incurred or illnesses avoided (opportunity costs).  It also needs to take into consideration effects usually in terms of quality of life years saved (QALYS).  Other quality of life or patient preferences may also be considered as part of this analysis.

At the same time, a threshold for willingness to pay needs to be established.  There are generally accepted societal values that range between $30,000 ad $50,000 but that too has changed and continues to change.  Ideally new products are cost savings but this rarely occurs.

Also important to consider is the time horizon for this analysis.  This may not be the same as what is necessary for approval or clearance.  The relevant time frame for different payors may be a factor.  For example, for commercial insurance, they may only consider 1 year time frames as relevant since employers and employees may change their contracts on a yearly basis.  This may be less true for government plans such as Medicare and Medicaid.  These are longer-termed payment relationships and with new payment models longer timeframes need to be considered since the costs of subsequent treatments and disease state changes are integrated into payment strategies.  Therefore the population of interest, and the likely payor mix, may influence the approach to determining the time horizon of interest.

So how does one approach this?  First of all, thinking of this before embarking on a clinical trial is key.  Where are you planning to market your product?  Only in the US?  Only OUS?  Understanding payment policies and strategies in your target regions can influence your strategy.  Understanding what the reimbursement strategy might be can tailor the data acquired as part of the trial.  Considering what alternative data sources might be are part of that consideration.  Know what parameters are of interest might be available in other databases, like Medicare, can create a strategy for minimizing the cost of accumulating those data.  Similarly, peer reviewed publications on similar analyses can be used as references.  Understanding the quality of those publications is also part of the initial strategy.

Once you have the data, doing the analyses, including sensitivity analyses and Markov modeling can help develop the message about the value of your product.  The latter helps define what happens in the clinical environment based on what has already happened.  This allows the analysis to include the probability of different outcomes based on the previous treatment or the natural history of the disease and help predict future effects, even if you can’t acquire the data directly.

Bottom line? Using these tools to create a strategy for data acquisition as part of a clinical trial, understanding data you may already have access to and what you need and identifying and justifying the value of your product to payors and consumers are integral to being successful in a value based environment.

Boston Biomedical Associates is ready to help you develop an effective clinical strategy, execute clinical trials, and conduct appropriate analyses to develop a meaningful ICER.  Enabling you to enter the market with an effective value proposition.

If you have questions about this guidance or need assistance please contact us by email at info@boston-biomedical.com or fill out our contact form.

Bonnie Weiner


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