Medicaid and Accelerated Approval: Spending on Drugs with and without Proven Clinical Benefits

Abstract

Many state Medicaid officials are concerned about rising prescription drug spending, particularly drugs approved through the Food and Drug Administration's (FDA) accelerated approval pathway. The authors examined how much of Medicaid programs' accelerated approval spending is attributable to products that have demonstrated clinical benefits versus those that have not. Their findings provide support for states' concerns that pharmaceutical companies often fail to complete their required postapproval confirmatory studies within the FDA's requested timeline. But the findings also highlight one issue that policy stakeholders have not yet devoted substantial attention to: the use of surrogate endpoints involved in the postapproval confirmatory studies for most of the products in this study's sample. The granularity of the study's results enabled an analysis of the impact of different policy recommendations on both the accelerated approval pathway and Medicaid programs. These findings inform the current policy debate, suggesting that policy stakeholders might focus attention on products converting their approval on the basis of surrogate outcomes rather than on clinical outcomes.

Keywords: Food and Drug Administration; Medicaid; accelerated approval; drug pricing.

Figure 1.. Annual Gross and Net Medicaid Spending by Product Category

^a Gross spending represents the national total amount reimbursed in the State Drug Utilization Data. Net spending reduces the total to account for Medicaid rebates paid back by the manufacturers under the Medicaid Drug Rebate Program. ^b Product categories represent approval status (not yet converted, converted based on surrogate endpoints, and converted based on clinical endpoints) during each year. For products with multiple indications, spending estimates were based on the earliest accelerated approval and conversion dates.

Figure 2.. Proportion of Annual Medicaid Spending on Converted Products by Product Category

^a The graph represents the proportion of spending on converted products comprised by those that completed post-approval confirmatory trials based on surrogate endpoints alone or clinical endpoints (including clinical endpoints alone and both clinical and surrogate endpoints). Proportion of gross and net spending were the same across product categories. ^b Product categories represent approval status during each year. For products with multiple indications, spending estimates were based on the earliest accelerated approval and conversion dates.