State policymakers and purchasers in California are uniquely positioned to further integrate comparative effectiveness research into insurance benefit design, formulary development, and price negotiation to ensure all patients have access to effective treatments at a fair price

BOSTON, March 16, 2023 – The Institute for Clinical and Economic Review (ICER) recently published a White Paper, “Applying the Results of Comparative Effectiveness Research to Control Drug Costs: Policy Options for California,”  detailing how comparative effectiveness research can be used by policymakers and health insurers in California to address rising drug costs by aligning spending with the degree of benefit a treatment provides.  ICER received a grant from the California Health Care Foundation (CHCF) to develop the White Paper.

“For years, ICER has led a national discussion about how to align the prices in our health care system with the benefits patients receive from various treatments, therapies, and interventions,” said ICER’s Executive Vice President and Chief Operating Officer, Sarah K. Emond, MPP. “Comparative effectiveness research can guide policymakers as they ensure that patients have access to transformative therapies at fair prices. Several states have begun implementing approaches grounded in comparative effectiveness research that are likely to produce meaningful savings and improve access for patients and the health care system.”

This White Paper examines how comparative effectiveness research may inform multiple policy options:

  • Expanding California’s existing drug price transparency requirements to compare the net (post-discount) prices of drugs to fair prices suggested by research, with the goal of informing future legislation to address drug costs;
  • Establishing state-based drug affordability review authority by further utilizing comparative effectiveness research to support supplemental rebate negotiations in Medi-Cal or by creating a “prescription drug affordability board” that would set the maximum amount that state (and potentially private) purchasers could pay for a drug; and
  • Implementing value-based benefit designs that incentivize manufacturers to lower their prices in exchange for broad access to their products, and to encourage patients to choose fairly-priced drugs when multiple options exist.

To inform this paper, ICER conducted interviews with representatives from California state agencies, public and private payers in California, experts on legislative considerations for drug pricing policy, and individuals from other states who are involved in efforts to address prescription drug spending. 

About ICER

The Institute for Clinical and Economic Review (ICER) is an independent non-profit research institute that produces reports analyzing the evidence on the effectiveness and value of drugs and other medical services. ICER’s reports include evidence-based calculations of prices for new drugs that accurately reflect the degree of improvement expected in long-term patient outcomes, while also highlighting price levels that might contribute to unaffordable short-term cost growth for the overall health care system.