Cost-Effectiveness Plan Design
Until now, pharmacy benefit managers (PBMs), such as CVS Caremark, have had no ability to impact the initial launch
price of a drug, which is set solely by the manufacturer. Our new plan design to exclude medications that exceed a
certain threshold for cost per quality-adjusted life year (QALY) from the benefit is another tool our clients can choose to
use as one of the ways to reduce the total cost of benefits.
We utilize cost-effectiveness research and analysis published by the Institute for Clinical and Economic Review (ICER)
to determine coverage of high-cost drugs. Cost-effectiveness is measured as the QALY ratio — time added to a
patient’s life or improvement in the quality of life — or effectiveness of the drug to its price tag
Our program:
Targets new drugs that come to market at a QALY ratio higher than $100,000
Applies to high-cost “me-too” drugs while continuing to include Breakthrough Therapies
Provides payors the choice to not cover drugs launched at high prices that DO NOT provide a significant
incremental clinical benefit
What is a QALY ratio?
Quantitative methods like QALY ratios are
statistical value assessments, or analysis, of
the incremental cost-effectiveness of a health
care intervention compared to its cost.
The framework of these value assessments was created by ICER, and its purpose is “to form the backbone of rigorous,
transparent evidence reports that, within a broader mechanism of stakeholder and public engagement, will help the United
States evolve toward a health care system that provides sustainable access to high-value care for all patients.
The intent of the program is not to say whether a particular drug is valuable or not, rather it is a matter of bringing the
pharmaceutical industry to some sense of rationality around drug pricing. We want to help ensure appropriate access
while encouraging manufacturers to initially price their drugs at what is widely seen as a reasonable value in health care.
To do so, we have designed our program to only target new drugs coming to market at unsustainably high cost-per-QALY.
QALY ratios and cost-effectiveness
analyses take into account:
• The cost of a drug
• The length of time it adds to a
patient’s life
• The improvement in patient
quality of life