An Oregon proposal to exclude expensive drugs that received FDA fast-track approval from Medicaid coverage is alarming advocates for patients with cancer and other life-threatening diseases.
If approved, the proposal could limit access in Medicaid to promising treatments for patients with deadly conditions, and could encourage other states to similarly attempt to restrict access to get relief from rising drug costs, advocates say.
At issue are drugs approved under the Food and Drug Administration’s accelerated approval pathway, which emerged in the 1990s during the AIDS crisis as a way of speeding access to medications for patients with serious conditions and few, if any, treatment options. The pathway has gained renewed attention from lawmakers after the FDA approved
Accelerated approval drugs can be very expensive—many of them over $10,000 per month—and many more are in the pipeline, according to Matt Salo, executive director of the National Association of Medicaid Directors. The Oregon proposal is a sign that states are worried about how they’ll pay for such treatments, he said.
Other states will be watching the response of the Centers for Medicare & Medicaid Services to the Oregon proposal “very closely,” Salo said.
Annual Medicaid spending on accelerated approval drugs increased from $728 million in 2015 to $1.44 billion in 2020, and the percentage of program spending that went to such drugs increased from 2.3% to 4.2%, according to a 2021 study in Health Affairs.
Drugmakers ordinarily must show that their products produce a benefit through lengthy and costly clinical trials to win approval—meaning a favorable effect on how a patient feels, functions, or survives.
Accelerated approval removes the requirement to run clinical trials upfront. Instead, drugs are approved based on their effect on a “surrogate endpoint,” an objective indication thought likely to lead to a clinical benefit.
The result has been quicker approval of promising drugs. But Oregon’s proposal zeroes in on a frequent criticism of the accelerated approval pathway: that it removes pressure on drugmakers to run the clinical trials that are needed to show that their products do, in fact, produce a clinical benefit.
The Oregon proposal is part of the state’s application to renew and amend its Section 1115 waiver, referring to special conditions under which it runs its Medicaid program.
Section 1115 is a part of the Social Security Act that deals with Medicaid and allows the secretary of the Department of Health and Human Services to waive program requirements to allow states to test new approaches to coverage and payment.
Oregon’s current waiver is set to expire June 30. The federal comment period on the renewal proposal closed April 7.
Current Medicaid regulations generally require states to cover all drugs that have been approved by the FDA, including where the drugmaker subsequently fails to show clinical efficacy within the timelines that were imposed as a condition of accelerated approval, the Oregon renewal application said.
In return for guaranteed Medicaid coverage for their FDA-approved drugs, drugmakers are required to pay large rebates to the states. Medicaid spent about $64 billion on outpatient prescription drugs in 2017, and collected $34.9 billion in rebates, resulting in net spending of $29.1 billion, according to the Medicaid and CHIP Payment and Access Commission.
Allowing Oregon to exclude accelerated approval drugs would give drugmakers an additional incentive to complete the required clinical trials, and would ensure that states are paying only for drugs that have been proven to provide a clinical benefit, Oregon said.
That is not always the case under the current system, said Rachel Sachs, a professor at the Washington University School of Law.
“There are cases where a drug manufacturer completes the confirmatory trial on a drug that has received accelerated approval, the trial fails, and the drug stays on the market,” Sachs said. “And the FDA either can’t or won’t remove it. And that raises an important question: should the states and the taxpayers have to spend their limited resources on a product that has no demonstrated evidence of clinical benefit?”
But those who look at the issue of accelerated approval drugs from the standpoint of patients rather than of the Medicaid program as a whole ask a different question: whether it makes sense to allow states to restrict access to lifesaving drugs for low-income patients in the name of cost savings.
“This is a matter of incredible importance for cancer patients,” said Mark Fleury, a principal on the policy development team at the American Cancer Society. “Oncology makes up the lion’s share of accelerated approvals for all drug types, and within oncology, the majority of new molecular entities that have been approved over the past three years have been via accelerated approval.”
The impact on drug availability for patients who have no other treatment options have been dramatic, he said. The accelerated approval process has reduced the time for drugs to hit the market by 3.4 years on average.
“For cancer patients, that can make all the difference,” he said. “This process really is working. It really is granting patients earlier access to life-extending and lifesaving treatments.”
The problem with the Oregon proposal is that its target is the drug companies but its victims are Medicaid enrollees in need of accelerated approval drugs, said Wayne Turner, a senior attorney in the National Health Law Program.
“This isn’t a problem for the individual states to handle through the Section 1115 waiver program,” Turner said. “This is a matter for Congress.”
A variety of policy proposals have surfaced in Congress aimed at reforming the accelerated approval pathway and pressuring drug companies to complete confirmatory clinical trials.
These include allowing the FDA to take quicker action to remove drugs from the market once they have failed to demonstrate clinical benefit, requiring drugmakers to provide a plan for confirmatory trials before obtaining accelerated approval, increasing reporting requirements related to confirmatory trials, and imposing fines on drugmakers that fail to complete the trials.
A proposal floated by MACPAC would require drugmakers to pay increased rebates for accelerated approval drugs.
But looming in the background is a more fundamental issue for Congress to address, said Salo: how to help state Medicaid programs pay for an expected flood of expensive new treatments in the coming years.
“There’s a whole world of new therapies coming our way, we’ve really made it a national priority to go ‘all in’ on innovation, but we haven’t had the follow on conversation about the cost of innovation, and how we’ll pay for it,” he said.
“You’d find a lot of agreement from the states about this: we’re probably going to need help from our federal partners to spread the cost out more broadly.”