Medicaid commission to Congress: Increase rebates for accelerated approval drugs
As the FDA continues to approve more new drugs under its accelerated approval pathway, the non-partisan Medicaid and CHIP Payment and Access Commission (MACPAC) is telling Congress to increase the statutory Medicaid rebates for such drugs until their clinical benefits have been verified.
Higher rebates for drugs with accelerated approvals, a move opposed by the biopharma industry, would mean lower net prices, lessening their financial burden on the health care system while incentivizing the companies to speed the verification of the drugs’ clinical benefits in confirmatory trials. Once those benefits are confirmed, the companies would return to the lower rebates when the accelerated approval is converted into a full approval, MACPAC suggests.
“The Commission is not recommending a specific increase in the rebates but notes that the amount needs to be significant enough to provide a meaningful reduction in spending and provide a strong incentive to encourage completion of the confirmatory trial, but not so large as to discourage development of drugs for conditions that disproportionately affect Medicaid beneficiaries,” MACPAC said in its June report to Congress.
The push to rein in spending on drugs winning accelerated approval comes as the FDA recently granted such an approval for Biogen’s new Alzheimer’s drug Aduhelm, which is priced at $56,000 per year and could quicken CMS’ path to insolvency while the company has 9 years to complete its confirmatory trial.
And Aduhelm is not alone, from 2010 to 2015, net spending on specialty drugs in Medicaid almost doubled, growing from $4.8 billion to $9.9 billion, MACPAC noted.
Meanwhile, from 2015 to 2019, 31 drugs (14.1% of all approvals during that period) came through the accelerated pathway. By comparison, the same number of drugs received accelerated approval in the 10-year period of 2005 to 2014. But MACPAC notes that many of these confirmatory trials for accelerated approvals can take a decade or longer to complete, leaving states on the hook for pricey treatments even as their clinical benefits are not confirmed.
Massachusetts and Tennessee have requested Section 1115 demonstration waivers (and Tennessee’s request has been approved) to implement a closed formulary, meaning that the state could choose to exclude certain drugs or classes of drugs.
“These states specifically requested authority to exclude coverage of accelerated approval drugs because state officials believe the high prices of these drugs do not lead to prudent fiscal administration when the clinical benefit has yet to be verified,” MACPAC said.
Another concern is that drugmakers do not have the same financial incentives to complete these confirmatory trials as they do with Phase III clinical trials, according to MACPAC, and a negative finding from a confirmatory trial could reduce a company’s revenues and result in the removal of the drug from the market.
“When asked about the rebate amount, most TAP [technical advisory panel] participants suggested that the increase in the minimum rebate for accelerated approval drugs should be higher than the 8 percentage point increase in the minimum rebate provided under the Patient Protection and Affordable Care Act,” the report says, leaving it up to Congress to decide on the specifics. “However, too high a rebate could discourage manufacturers from investing in the development of drugs for conditions that disproportionately affect Medicaid beneficiaries.”
In addition to drugs approved under the accelerated pathway, MACPAC also is seeking a new national drug benefit for cell and gene therapies that could allow for new coverage, payment, or rebate requirements without disrupting the structure of the Medicaid Drug Rebate Program for all other outpatient drugs.
“One option would be to create a centralized, national coverage pool for these products. A federally administered program would allow standardization of coverage and payment rules across states and plans,” MACPAC says. “This model could be designed to address several concerns. For example, by increasing federal funding for these products and pooling patients nationally to increase utilization predictability, it could help address states’ concerns about high up-front costs and budget volatility.”
But the commission stopped short of making any specific recommendations to Congress on cell and gene therapies. MACPAC also conducted an analysis of the pipeline of new specialty drugs for Medicaid.