The Scope and Future of ISPOR Value Flower With Inflation Reduction Act

OBJECTIVES: The Inflation Reduction Act (IRA) 2022, allows Medicare to negotiate prices of high-cost drugs without generic or biosimilar competition. This creates a need for a value assessment framework (VAF) for optimal pricing. Previous VAFs lacked consistency and objectivity. The ISPOR value flower, introduced in 2018, has been discussed for its potential as a VAF. This study aims to evaluate the use of ISPOR value flower for pricing and reimbursement discussions.

METHODS: We conducted desk research to identify policy papers and previously conducted policy analysis to understand the IRA and the possible utilization of ISPOR value flower.

RESULTS: The Centers for Medicare & Medicaid Services (CMS) will not use quality-adjusted life years (QALYs) in the negotiation program staring from 2026. It will consider cost of alternatives, prescribing information, comparative effectiveness, and unmet medical needs. It will assess manufacturer-submitted R&D costs, production and distribution costs, and financial gain with the drug. The ISPOR value framework highlights "reduction in uncertainty," "insurance value," "real-option value", and "scientific-spillover” to identify added benefits from reduced adverse events, access to effective treatments, extended life from innovations, and R&D value through economic evaluations. Appropriate modelling technique may assess the additional values. A 2022 study demonstrated cost-effectiveness analysis (CEA) with additional value elements, paving the way to discuss their feasibility.

CONCLUSIONS: The value of a drug differs for patients and insurers. Traditional CEA assessing QALYs overlooks factors like disease severity, access equity, patient preferences, and unmet needs, giving manufacturers the same value per unit regardless of severity. Some European health-technology assessment authorities have used higher willingness to pay thresholds in past, and recently, the Institute for Clinical and Economic Review (ICER) also stated they would consider additional value elements. With the growing need for value-based pricing, the ISPOR value flower may help assess a new technology's true value.