Institute for Clinical and Economic Review (ICER)

ICER was founded using a $430,000 grant from Blue Shield of California Foundation, the official foundation of Blue Shield of California, an insurance company that operated as a nonprofit until 2014. ICER is funded primarily by nonprofit organizations, several of which are other official foundations of businesses in the healthcare industry. ^{1 2}

History

The Institute for Clinical and Economic Review was founded in 2006 as a research program for Harvard Medical School within Massachusetts General Hospital. ³ ICER was founded by Steven D. Pearson with a $430,000 grant from Blue Shield of California Foundation. Pearson founded ICER to perform research that would be used to advocate for price controls in the pharmaceutical industry and influence public policy to adopt price controls using ICER’s method of establishing what it considers to be a fair price. ^{4 1}

For its first four years, ICER’s primary method of advocacy was publishing analyses on the justification of pharmaceutical prices for specific drugs within the United States. In 2010, ICER started the New England Comparative Effectiveness Public Advisory Council (New England CEPAC), which used a collection of professionals to review ICER’s analysis in addition to patient testimonies to expand on its advocacy. ³

In 2013, ICER disaffiliated from Massachusetts General Hospital and filed as an independent 501(c)(3) organization. ³

In 2014, ICER started publishing what it calls health technology assessments (HTAs), which report on what it argues would be a fair price, if any, for new drugs. ⁵ In 2015, ICER received a $5.2 million grant from the Laura and John Arnold Foundation to start its Technology Assessment Program, which provides reports evaluating the effectiveness of a drug with its cost-effectiveness and impact on the budget of all parties within the health care industry. ⁶

In 2017, the U.S. Department of Veterans Affairs began using ICER’s reports to make coverage decisions to determine whether a certain drug or treatment is worth using taxpayer’s money. ⁵

Programs

The Institute for Clinical and Economic Review’s Technology Assessment Program evaluates new drugs during the Food and Drug Administration (FDA) approval process by comparing the so-called effectiveness of the new technology with the health benefit to create reports arguing how much the drug is worth and should cost. ICER also has a Patient and Stakeholder Engagement Program that supports the Technology Assessment Program by including the drug user and their families’ reported experiences in ICER’s price-fixing analysis. ⁷

ICER hosts three regional forums to discuss the results and possible implementation of its research with all parties of the healthcare industry including policymakers, insurance companies, pharmaceutical companies, and manufacturers. It uses the forums to advocate for price fixing. ICER hosts the California Technology Assessment Forum, Midwest Comparative Effectiveness Public Advisory Council, and the New England Comparative Effectiveness Public Advisory Council. ⁷

Criticisms

Critics of the Institute for Clinical and Economic Review argue that ICER’s method of assigning a so-called fair price to medical treatment is unethical because of its use of quality-adjusted life-year (QALY) calculator which is a formula that assigns a dollar value to an individual based on their age, medical condition, and other factors. They argue that QALYs cannot fairly determine the value of an individual’s life. Additionally, they argue using an arbitrary value of a person’s life allows insurance companies to deny coverage, and the arbitrary value would be unfairly determined by the insurance company’s budget. ⁸

Within ICER’s forums, it allows beneficiaries of increased drug costs, pharmaceutical companies and insurance agencies, to participate and advocate for increased drug costs that ICER provides in its reports used to determine drug costs by the U.S. Department of Veterans Affairs. Additionally, ICER receives funding from the nonprofit organizations controlled by and associated with insurance agencies. ⁹ In addition to the Department of Veterans Affairs, ICER reports that over 75 percent of private insurers use ICER’s reports to influence price and coverage criteria. ³

People

Steven D. Pearson is the founder and president of the Institute for Clinical and Economic Review. Pearson is a former research fellow for America’s Health Insurance Plans (AHIP), an insurance-industry trade association that spent nearly $10 million in lobbying in 2015. ⁸ Pearson is an internist and lecturer at Harvard Medical School. He also served in the George W. Bush administration as special advisor for technology and coverage policy at the Centers for Medicare and Medicaid Services and held a position as a visiting scientist in the Department of Bioethics at the National Institutes of Health. ¹⁰

Financials

According to its 2019 tax returns, the Institute for Clinical and Economic Review received $10.4 million in contributions, $389 thousand in program revenue, and a total revenue of $10.8 million. ¹¹ It also reported spending $4.1 million in salaries and compensation out of its $6.7 million in total expenses. ¹²

ICER’s website reports that in 2021, 74 percent of its funding came from other nonprofit organizations and that it “does not accept funding from manufacturers or private insurers to perform reviews of specific treatments or therapies.” ¹³ Its donors include Blue Cross Blue Shield of Massachusetts, California Health Care Foundation, and Kaiser Foundation Health Plan Inc. ²