Most new drugs are still too costly at launch, ICER says

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Dive Brief:

• The launch prices of two-thirds of the new prescription drugs reviewed by the watchdog group ICER between 2022 and 2025 far exceeded the organization’s threshold of cost-effectiveness, according to a report published Tuesday.
• When adjusted for inflation, the median net price of new medicines spiked from $190,000 in 2022 to $257,000 in 2025, though most of that upswing occurred early on, ICER said. The 2025 figure includes high-cost gene and cell therapies that are expensive to manufacture but are often only administered once. Nearly a quarter of the drugs ICER evaluated last year had a net price surpassing $500,000.
• ICER called on drugmakers to enact “fair pricing.” The group also pushed insurers to boost access to new therapies, noting that four in 10 prescriptions for the medicines it reviewed were rejected and that the statistics were worse for Medicare recipients. Value-based drug pricing should be “met with streamlined access to new drugs with little to no cost-sharing for patients,” ICER argued. 

Dive Insight:

Drug costs continue to be a hot-button topic in the U.S. The majority of Americans believe the price tags for prescription medicines are unreasonable and worry about being able to afford them, according to a recent poll from the Kaiser Family Foundation.

Successive presidential administrations have sought to address this issue in one way or another. Former President Joe Biden signed into law a policy that, for the first time, gave Medicare the power to negotiate lower prices for certain drugs. Donald Trump has formed more than a dozen deals asking drugmakers to adopt “most-favored nation” prices in return for tariff relief. These moves have yet to meaningfully affect pharmaceutical companies’ bottom lines. 

The cost of medicines is a thorny issue for the pharmaceutical industry, which has long argued that drug innovation — a highly risky endeavor — requires a substantial return on investment to be worthwhile. ICER, or the Institute for Clinical and Economic Review, has for years aimed to provide a counter-voice, using a methodology that compares prices to the value medicines provide to argue costs should be lower. 

Drugmakers have contended that ICER’s cost-effectiveness guidelines, which take into account how medicines extend survival or improve quality of life, are flawed. Yet that framework is similar to what agencies in other countries, like the U.K.’s National Institute for Clinical Excellence, use to evaluate medicines. ICER’s benchmarks for value are $100,000 or $150,000 per “quality adjusted life year,” an academic measure of one year of perfect health.

ICER’s latest report drew statistics from the 26 drugs it previously reviewed and that were approved between 2022 and 2025. Of those medicines, Insmed’s lung-disease drug Brinsupri and Merck & Co.’s pulmonary arterial hypertension medicine Winrevair were judged to have the biggest disconnects between their net prices and overall value. ICER contended that both would need discounts of around 90% from their current costs to meet its guidelines.

Johnson & Johnson and Legend Biotech’s CAR-T therapy for multiple myeloma, Carvykti, could be reduced by one-third from its $465,000 net price to justify its cost, ICER said. 

Vertex Pharmaceuticals’ non-opioid pain drug Journavx, on the other hand, is priced within ICER’s cost-effectiveness thresholds. And Casgevy, the gene editing treatment from Vertex and partner CRISPR Therapeutics, might only need a 7% reduction from its $2.2 million net price to represent good value for money.