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Will State Medicaid Programs Tap the Brakes on Accelerated Approval Drugs?

MHE PublicationMHE November 2021
Volume 31
Issue 11

Drugs that the FDA has approved on its fast-track accelerated approval basis are making up an increasingly larger share of Medicaid spending on pharmaceuticals.

Drugs that the FDA has approved on its fast-track accelerated approval basis are making up an increasingly larger share of Medicaid spending on pharmaceuticals, according to a study published recently in JAMA Health Forum, and some experts are suggesting that Medicaid payments be adjusted to account for their unproven clinical value.

Rachel E. Sachs, J.D., M.P.H., an associate professor at Washington University in St. Louis School of Law, and her colleague reported in JAMA Health Forum in October that drugs approved on the accelerated basis accounted for less than half a percentage point (0.2% to 0.4%) of state Medicaid prescriptions. But when it came to spending, they accounted for 6.4% ($2.2 billion of
$34.6 billion) of the net spending in 2015, a proportion that increased to 9.1% ($2.5 billion of $27.6 billion) in 2018.

Accelerated approval of drugs started in 1992. As the name suggests, it is designed to speed up the FDA approval process so drugs with major health benefits will be available to patients sooner. To that end, the clinical trial results that the agency considers for drugs designated for accelerated approval often use surrogate end points — a lab value or other measurement that is viewed as a reliable proxy for a clinical outcome, such as prevention of heart attack or stroke.

But Sachs and her co-investigators — and others — are concerned about an approval process that depends so heavily on a surrogate end point because they can fall short of being proxies for favorable outcomes. When they do, that means Medicaid programs and other payers have paid for drugs approved on an accelerated basis that haven’t benefited patients as expected. Sachs and her co-authors cite the example of Makena (hydroxyprogesterone caproate injection), a synthetic hormone that received approval in 2011 based on its ability to reduce the risk of recurrent preterm birth, a surrogate end point for improved neonatal outcomes.

But in 2019, a confirmatory trial failed to reproduce these findings. In October 2020, the FDA proposed withdrawing the approval. Sachs and her colleagues estimate that between 2012 and 2019, state Medicaid programs spent an average of $118 million per year on Makena “while seemingly achieving little or no therapeutic benefit for patients.”

High-priced cancer treatment drugs represent a growing proportion of drugs or drug indications approved on an accelerated basis. Recently, less-than-favorable postmarketing data have resulted in drug manufacturers pulling back on indications that had the FDA’s accelerated approval blessing. Earlier this year, Bristol Myers Squibb withdrew the hepatocellular carcinoma indication for Opdivo (nivolumab), Merck withdrew the metastatic gastric cancer indication for Keytruda (pembrolizumab) and Genentech withdrew the metastatic triple-negative breast cancer indication for Tecentriq (atezolizumab).

Some experts believe the FDA should be more selective about approving drugs based on surrogate end points. Others have suggested that payers could develop payment policies that would reflect the uncertainty of the clinical value of the accelerated approval drugs until there’s solid evidence from confirmatory trials and postmarketing data. Sachs and her colleagues mention a recommendation made by the Medicaid and CHIP Payment and Access Commission (MACPAC) earlier this year.

By law, state Medicaid programs get hefty rebates from drug manufacturers. MACPAC, a group of outside experts appointed to advise Congress on Medicaid policies, suggested raising the rebate level on accelerated approval drugs so it is higher than the rebates for fully approved drugs.

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