Senate Finance Panel’s New Legislative Staffer Kaltenboeck Likes QALYs For Valuing Drugs
Executive Summary
Anna Kaltenboeck joins the committee from Memorial Sloan Kettering’s health policy group, which has been an active participant in US drug pricing reform policy development and a critic of the biopharma industry, often through public commentary by its director, Peter Bach.
The US Senate Finance Committee’s new legislative staffer for drug pricing, Anna Kaltenboeck, brings an interest in measuring drug value though cost per quality adjusted life year metrics and a skepticism about whether value-based contracting can control pricing.
The use of QALYs has gained attention in the US in recent years because it is used in cost effectiveness reviews by the Institute for Clinical and Economic Review. ICER contrasts the price of a drug against its added benefit to patients using a cost per QALY formula, which is also used in Europe.
The approach has drawn stiff criticism from the biopharma industry and patient advocacy groups that claim QALYs are a one-size fits all approach that overlook the needs of certain patients. (Also see "ICER Faces New Foe As Patient, Disability Alliance Takes Aims At Reports On Mayzent, Spravato" - Pink Sheet, 22 Jun, 2019.)
The development of legislation establishing a government-sponsored health technology assessment program based on QALYs would be a worrisome development for industry.
Finance Committee chair Ron Wyden, D-OR, announced on 10 May that Kaltenboeck would be joining the staff as a senior health advisor focusing on drug pricing and Medicare Part D. She was previously program director and senior health economist at Memorial Sloan Kettering’s Center for Health Policy and Outcomes, where she focused on value-based pricing methods and other drug pricing reforms.
Wyden is interested in developing drug pricing legislation that builds on the bill he co-authored with Sen. Chuck Grassley, R-IA, in the last Congress, a Finance committee spokesperson said. The legislation would impose price inflation rebates on drugs in Medicare and redesign the Part D benefit, including by capping out of-pocket spending.
Wyden has said he wants to go further and include a provision authorizing direct government price negotiation in Medicare in any drug pricing reform legislation that advances. A centralized health technology assessment program could inform that process, but the biggest challenge to the approach appears political rather than technocratic. Legislation that would allow direct government negotiation of Medicare prices will have a challenging time even passing the House this session.
“Chairman Wyden is committed to making good on Democrats’ promise to lower drug costs for Americans and allow Medicare to negotiate prices,” the spokesperson said. “He welcomes President Biden’s call to make Medicare negotiation a reality this year and will be working with colleagues in the House and Senate to make that happen.”
‘The QALY Must Be Defended’
Kaltenboeck has written frequently about the issue of valuing prescription drugs and supports the use of the QALY metric as an objective means of determining value in the context of an independent cost effectiveness assessment conducted by a third party, such as ICER.
“Today more than ever, these analyses are needed to make informed choices,” she and colleague Jennifer Chen wrote in the Health Affairs Blog last July. “The QALY must be defended, as an objective and generalizable metric that provides important information about the balance between fiscal realities and public health needs.” The QALY “is designed to integrate the distinct domains of symptom and life expectancy improvement, which together and separately matter for patients with complex and disabling conditions,” the authors continued.
“In some cases, the QALY improvement comes primarily from a treatment lengthening survival for diseases such as cancer. In others, QALY improvement comes from treatments increasing how often patients feel better. In effect, the QALY gives credit for both types of improvement, not one over the other,” they explained.
Arguing that pharma’s campaign against use of the QALY is aimed at protecting profits, Kaltenboeck and Chen added: “pharmaceutical companies’ revenues and profits increase the more their products’ prices exceed those which an independent value assessment would deem justifiable. The industry response – to covertly throw sand in the gears of these assessments – threatens to undermine not just the QALY but objective analyses of policy decisions.”
Revival Of Interest In A Competitive Acquisition Program?
Kaltenboeck has also expressed skepticism about whether value-based contracts, including outcomes-based or annuity-type payment models, are effective at lowering drug costs. “Experiences to date … suggest that outcomes-based contracts and long-term financing deals hold insufficient promise of achieving meaningful risk-sharing or value-based prices,” she wrote in an article published in Value In Health 29 March 2020.
She suggested a more “direct” approach to promoting value while balancing access, affordability and innovation is a “competitive action program,” in which a third-party vendor contracts with a payer to negotiate with manufacturers for discounts.
Medicare tried such an approach for Part B drug in 2006 but discontinued the program two years later after it failed to produce savings or enroll enough participating providers. The Medicare Payment Advisory Commission has suggested a revival of the ideas with some important revisions. (Also see "Part B Reforms: MedPAC Moving Forward With 'Drug Value Program' Proposal" - Pink Sheet, 6 Mar, 2017.)
Kaltenboeck suggested that “coupled with modifications to address its initial deficiencies and tailored toward value-based management, CAP offers policymakers tools to reduce inflationary pressure on prices, which contracting strategies do not.”