ICER Shared Savings approach (50/50 cost-offset cap)
This method adjusts the value-based price of a new treatment by sharing the cost savings between the healthcare system and the drug manufacturer. It assumes that only half of the savings generated by a treatment go to the healthcare system (50/50 split), and limits the total offset savings to $150,000 per patient per year. This can lower the estimated value and recommended price of treatments, especially for rare and severe diseases.
At a glance
Use when
Assessing value of high-cost therapies with significant cost-offset potential, especially in chronic or rare diseases; when aligning pricing with payer budget impact
Avoid when
Evaluating curative or transformative therapies for rare diseases where full cost savings should be recognized; in pediatric or life-extending treatments with long-term societal benefits
Inputs
Disease-specific annual direct and indirect economic burden, treatment efficacy (e.g., cure assumption), patient population characteristics (onset age, life expectancy, prevalence, quality of life)
Outputs
Adjusted health-benefit price benchmark, estimated cost savings eligible for sharing, difference in value under 50/50 vs. capped methods
How it works
The ICER Shared Savings approach applies two variants: a 50/50 cost-sharing assumption where half of the cost savings from a therapy are attributed to the healthcare system, and a $150,000 cap on total eligible cost offsets per patient per year. These adjustments reduce the health-benefit price benchmark in ICER's value assessments. The method is applied to estimate the financial impact of curative or highly effective therapies, particularly for diseases with high baseline economic burden. It disproportionately affects diseases with high lifetime costs and early onset.
- HTA domains
- Costs & Economic Evaluation, Organisational aspects
- Assumptions
- Only 50% of cost savings are realized by the healthcare system; maximum $150,000 in attributable cost offsets per patient per year; savings are linear and predictable; long-term cost reductions can be monetized
- Strengths
- Incorporates real-world cost-offset considerations; promotes shared benefit between payers and manufacturers; conservative in high-cost scenarios; transparent and reproducible framework
- Limitations
- Disproportionately disadvantages treatments for rare, chronic, pediatric, and severe diseases; underestimates societal and long-term healthcare savings; cap may not reflect actual cost burdens of severe conditions
- Also known as
- ICER 50/50 shared savings, ICER cost-offset cap, Shared Savings Method
Questions this answers
- › How does ICER adjust value-based prices for cost savings?
- › What is the impact of the 50/50 savings split on drug pricing?
- › How does the $150,000 cost-offset cap affect value assessment outcomes?
- › Which diseases are most affected by ICER's shared savings assumptions?
- › Why might severe or rare diseases receive lower value-based price benchmarks under this method?
- › How do life expectancy, quality of life, and disease prevalence influence the method's impact?
References & sources
Similar by meaning
- ICER Value Assessment Framework
- ICER Value Framework 2020 Update - Aggregation of Benefits and Contextual Considerations
- Modifying NICE's Approach to Equity Weighting
- Generalized Risk-Adjusted Cost-Effectiveness (GRACE)
- Norwegian severity classes and severity-weighted cost-effectiveness thresholds (Magnussen approach)
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