Price Isn’t Value or Cost: ICER Launch Price Report Critique
Examining Six Significant Flaws in Icer’s Approach to Evaluating Drug Launch Prices and Access
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February 24, 2026
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Last October, the Institute for Clinical and Economic Review (“ICER”) published its first-ever Launch Price and Access Report, analyzing the price of newly approved FDA treatments. Evaluating 154 FDA-approved drugs from 2022-2024, ICER’s report concluded that drug launch prices are “rising unsustainably,” citing a 24% increase in median annual list prices and a 51% increase in median net launch prices, after adjusting for inflation. ICER further claimed that 16 of 23 drugs reviewed (70%) were priced above their Health Benefit Price Benchmark (“HBPB”), resulting in what they characterized as $1.3-1.5 billion in “excess” first-year spending.
Following its own analysis of ICER’s findings, FTI Consulting’s Center for Healthcare Economics and Policy has published a critique of the report (available here). The analysis identifies six fundamental methodological shortcomings undermining ICER’s conclusions:
- ICER failed to follow Congressional Budget Office (“CBO”) best practices as it does not incorporate the ability of new pharmaceutical interventions to reduce medical costs.
- ICER considered only initial annual price rather than costs over a patient’s treatment horizon.
- The report did not adequately consider how pharmaceutical prices impact the total cost to the US healthcare system, especially given evolving payer coverage restrictions.
- Reliance on quality-adjusted life years (“QALYs”) to establish the HBPB is both problematic for Medicare context and methodologically outdated.
- Their HBPB is highly problematic due to a narrow perspective on value.
- ICER ignores the fact that pharmaceutical spending is flat or falling as a share of total US healthcare spending.
Taken together, these methodological shortcomings render ICER’s conclusions about “excess” pharmaceutical spending and pricing is unsupported by comprehensive economic analysis. A more holistic evaluation framework incorporating full cost offsets, lifetime treatment horizons, access realities, equitable value assessment and accurate spending trends would likely yield substantially different conclusions about pharmaceutical value and affordability in the US healthcare system. The following is an abridged overview of FTI Consulting’s critique.
Six Fundamental Shortcomings: An Overview
ICER’s analysis failed to follow Congressional Budget Office (“CBO”) best practices as it does not incorporate the ability of new pharmaceutical interventions to reduce medical costs.
ICER’s analysis ignores how new pharmaceuticals reduce spending on other medical services, despite substantial evidence demonstrating that pharmaceutical innovation reduces hospitalizations, emergency visits and physician services across multiple disease areas. The CBO estimates that a 10% increase in prescription drug use reduces Medicare spending on medical services by approximately 2%. Real-world examples illustrate this dynamic clearly: Hemlibra (emicizumab) for hemophilia A costs $482,000 annually but saves approximately $6.7 million in lifetime costs compared to no prophylaxis when accounting for reduced bleeding episodes, while COVID-19 vaccines generated $5,800 in benefit per course despite costing only $6-$40 per course.
ICER considered only initial annual prices rather than costs over a patient’s treatment horizon.
ICER’s approach of focusing on initial annual prices rather than lifetime treatment costs is also problematic, particularly for curative or one-time therapies such as gene therapies, where a single upfront payment may replace decades of chronic disease management. For instance, ICER’s Launch Price and Access Report only considered the one-time net price of $2.2 million for Casgevy (exagamglogene autotemcel) and $3.1 million for Lyfgenia (lovotibeglogene autotemcel) gene therapies for sickle cell disease (“SCD”) and ignores the fact that costs under standard care amount to $1.5 million over a patient’s lifetime. Similarly, Hemgenix (etranacogene dezaparvovec) for hemophilia B costs $3.5 million but eliminates approximately $11 million in lifetime Factor IX prophylaxis treatments. Furthermore, ICER fails to account for the Inflation Reduction Act’s (“IRA”) inflation caps, which effectively limit inflation-adjusted price growth to 0% annually, meaning higher launch prices may result in lower long-term costs. Additionally, market competition drives significant price reductions over time, as evidenced by hepatitis C treatments and GLP-1 medications.
The report did not adequately consider how pharmaceutical prices impact the total cost to the US healthcare system, especially given evolving payer coverage restrictions.
Restricted (i.e., under prior authorization or step therapy), non-protected-class drugs in Medicare Part D plans increased from 31.9% in 2011 to 44.4% in 2020. ICER’s own report found that 58% of commercial new-to-brand prescriptions (i.e., a patient’s first-time prescription of a drug, not a refill) for newly approved drugs in 2024 were rejected due to non-coverage, prior authorization or step therapy requirements. Only 29% of total new-to-brand prescriptions were ultimately filled, with rejection rates exceeding 50% regardless of whether a drug was first-in-class, an orphan drug or deemed cost-effective by ICER. Therefore, higher prices with restricted access may result in lower total cost to the healthcare system than ICER’s analysis suggests.
ICER’s reliance on quality-adjusted life years (“QALYs”) to establish the HBPB is both problematic for Medicare context and methodologically outdated.
ICER’s use of QALYs and equal value life years (“evLYs”) raises both legal and methodological concerns. The Affordable Care Act and the Inflation Reduction Act explicitly prohibit metrics that value life extension differently based on age, disability, or terminal illness status in Medicare contexts. Alternative approaches like the Generalized Risk-Adjusted Cost-Effectiveness (“GRACE”) model address these shortcomings by introducing diminishing returns to health-related quality of life. GRACE demonstrates that willingness to pay should increase exponentially with illness severity, meaning cost-effectiveness thresholds should be substantially higher for severe diseases. Furthermore, ICER’s “shared savings” approach arbitrarily caps cost offsets, such as the $150,000 annual cap on cost offsets for their cost-effectiveness analysis on iptacopan, which does not follow economic best practices.
ICER’s Health Benefit Price Benchmark is highly problematic due to a narrow perspective on value.
ICER’s HBPB calculation fails to account for broader societal benefits recommended by the Generalized Cost-Effectiveness Analysis (“GCEA”) framework. GCEA identifies 15 value elements including productivity gains, caregiver spillover effects, equity considerations, option value, scientific spillover and community spillovers. ICER’s SCD evaluation, for example, failed to capture value in reducing health inequities for Black Americans, who comprise over 90% of SCD patients and have a life expectancy 4.4 years lower than white individuals. Applying GCEA methods to treatments previously evaluated by ICER found that while only 8 of 20 medicines produced societal value under traditional QALY-based cost-effectiveness analysis, at least 17 of 20 treatments produced value after accounting for disease severity and dynamic pricing. This suggests that ICER substantially underestimates societal return on investment from pharmaceutical innovation.
ICER ignores the fact that pharmaceutical spending is flat or falling as a share of total US healthcare spending.
Prescription drug spending accounted for 9.2% of total national health expenditure in 2023, a decrease from 10.3% in 2004, and pharmaceutical spending as a share of total US healthcare spending has remained flat, or even decreased, over two decades. The Centers for Medical and Medicaid Services’ National Health Expenditure Projections show prescription drug spending growth will slow from 7.0% in 2025, to 5.6% in 2026-2027, and to 4.7% in 2028-2033. Increases in pharmaceutical spending have occurred in line with overall healthcare expenditure growth, not representing a disproportionate share as ICER’s narrative suggests.
To download a copy of FTI Consulting’s critique of the ICER report, click here.
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Published
February 24, 2026
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