Medicaid Medicare Pharmaceuticals

Lower reimbursement for drugs with accelerated approval?

That is what various government bodies are considering. First lets turn to Medicaid via a report by Tyrus Jackson in JD Supra,

The Medicaid and CHIP Payment and Access Commission (MACPAC) voted on January 27 to recommend that Congress grant states the ability to limit Medicaid coverage for drugs and biologicals approved under the FDA’s accelerated approval pathway. The Commissioners were presented with two options for recommendation. The first option was for Congress to amend Section 1927(d)(1)(B) of the Social Security Act to allow states to exclude or restrict coverage of a covered outpatient drug based on a Medicare national coverage determination (NCD) including the coverage with evidence development (CED) requirements. The second option would allow states to impose coverage restrictions on drugs and biologicals consistent with those imposed under a Medicare NCD limiting coverage to an approved CED study.

Medicare is considering similar provisions. Stat News reports:

A Medicare official hinted Tuesday that Medicare might test a policy of paying less for drugs that receive so-called accelerated approvals than for drugs that are granted traditional approvals.

Further, FDA may move to remove marketing authorization from drugs that are approved via accelerated approval pathways who do not complete confirmatory trials. Rachel Sachs reports in Health Affairs that:

…both the House and Senate PDUFA bills included…stronger legislative authority for the agency to ensure that confirmatory trials are completed more quickly, including explicit statutory authority for the agency to require them to be underway at the time of approval…
Second, though, the agency itself (or at least its Oncology Center of Excellence, under the leadership of Director Dr. Richard Pazdur) has taken steps to more forcefully enforce its existing authority in this area. Dr. Pazdur has taken steps to encourage or force the withdrawal of “dangling” approvals—those indications or drugs “for which confirmatory trials did not verify clinical benefit” but which remain on the market—and the number of such withdrawals has significantly increased relative to prior enforcement.

In general, lower drug prices for drugs with uncertain benefits is likely a good thing. As confirmatory trials and real-world evidence come to light, if the treatments do have strong evidence of health benefits, the price should rise. This is known as the three-part pricing model (see Goldman et al. 2018).

With the Inflation Reduction Act’s inflation rebate–which basically cap Medicare drug prices at inflation–this strategy to set drug prices for accelerated approval low and increase with strong evidence may be hampered by the regulation.

Thus, lower drug prices for drugs with uncertain benefits is a good thing; as long as prices are allowed to rise once confirmatory evidence is produced in clinical trials and/or in the real world.