The societal perspective in cost-effectiveness analysis: ICER has done its part. Now it’s industry’s turn to step up.

By Joshua T. Cohen, PhD, Deputy Director

On January 31st, the Institute for Clinical and Economic Review (ICER) published its third value assessment framework. Perhaps because the release was on the Friday afternoon before Super Bowl Sunday (and Iowa Caucuses Monday), some may not have pored over ICER’s new framework immediately. And yet it heralds an important development: the potential for regular use of a societal perspective in ICER’s assessments.

This development marks a substantial change. Although ICER’s first framework, launched in 2015, included little about perspective, the primary analyses in its assessments generally omitted societal cost offsets, such as worker productivity gains, and “family spillover effects” (particularly, potential treatment impacts on caregivers). Except for ultra-rare conditions, ICER’s second framework (2017-2019) relegated the societal perspective to a scenario analysis. Because ICER uses only its base case analysis and not any of the scenario analyses to calculate value prices (prices in line with cost-effectiveness ratios of $100K to $150K per QALY), the societal perspective often has no chance to influence value prices.

ICER’s third framework (which will cover assessments conducted in 2020-2023) seemed headed in the same direction, noting in Section 3.5 that: “ICER uses the health care system perspective as its primary base case for several reasons”: (1) for public and private payers in the U.S., “primary responsibility … for the trade-offs they must manage rest[s] within the health system”; (2) estimating societal outcomes – like impacts on “income tax generation, educational outcomes, the criminal justice system, and disability and social security benefits” introduces substantial uncertainty; and (3) accounting for some outcomes – like productivity – raises ethical questions because it places less weight on people not in the workforce. Nonetheless, ICER then declared that it will present “a modified societal perspective as a co-base case” when societal cost or impact is large, or when doing so substantially influences cost-effectiveness.

For some therapies, this change will be important. My Tufts CEVR colleagues, Paige Lin and Tara Lavelle, examined 33 cost-effectiveness ratios in the published literature for Alzheimer’s disease treatments, calculated with and without caregiver impacts. For one-third of these ratios, adding caregiver impacts moved the ratio below the frequently used $50,000 or $100,000 per QALY benchmark. For pediatric assessments, including family spillover impacts reduced cost-effectiveness ratios by 31%. Including productivity effects – another societal impact ICER says it will consider – could well make a difference for therapies addressing disabling but non-lethal conditions experienced by people of working age like migraine headaches or depression.

However, don’t count on ICER to necessarily conduct a societal analysis simply because societal impacts might be important. Remember that ICER defaults to the health system perspective, unless it believes societal costs and effects to be substantial relative to total costs and effects, or if it thinks inclusion of societal impacts could substantially alter a therapy’s estimated cost-effectiveness. Moreover, ICER often omits cost-effectiveness components for which it believes the data are inadequate. 

Thus, ensuring that the societal perspective gets the attention warranted requires a proactive approach by drug companies and others seeking to influence ICER reviews. First, engage with ICER to develop a common understanding of the data needed and how they should be analyzed to estimate societal impacts. If you can demonstrate that societal impacts are large or have a sufficient impact during the ICER assessment’s scoping stage, you are in a better position to convince ICER to include a societal co-base case. Second be prepared to estimate cost-effectiveness from a societal perspective in case ICER’s draft evidence report does not seem to accurately characterize its value.

ICER has opened the door to a societal perspective. It will be important for drug companies and other parties to help ensure ICER has the data needed to properly recognize and characterize societal benefits.


Funded by a three year, $500,000 grant from the PhRMA Foundation, The Center for Enhanced Value Assessment (CEVA) at the Center for the Evaluation for Value and Risk in Health (CEVR) at Tufts Medical Center is conducting research on when it makes sense and is important to include components of value not typically accounted for in conventional cost-per-QALY health technology assessments. We will be looking closely at how ICER’s new societal perspective guidance may influence its evaluations.

The societal perspective in cost-effectiveness analysis: ICER has done its part. Now it’s industry’s turn to step up.

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