Accelerated approval drugs incur significant fee-for-service Medicare costs

1. Medicare beneficiaries used 36 accelerated approved drugs across 55 indications, totaling $1.2 billion in Medicare fee-for-service spending in 2019.

2. Beneficiaries were responsible for $209 million in cost-sharing before supplemental income and assistance programs.

Evidence Rating Level: 2 (Good)

Study Rundown: Accelerated approval of drugs is one of the avenues the U.S. Food and Drug Administration (FDA) utilizes to provide patients with faster access to pharmaceuticals for serious conditions or with unmet needs. Although most medications are granted full approval, some remain on the market without full approval for years. Further, some are withdrawn before full approval is achieved. In the present study, drugs which have not achieved full FDA approval or have not been withdrawn from the approval process before January 1, 2019 were examined. Medicare fee-for-service claims were used to estimate Medicare spending. Medications were only identified with FDA-approved indications based on the accelerated pathway or with accelerated approved indications for existing drugs. A total of 45 drugs across 69 indications were identified in the accelerated approval pathway as of January 1, 2019 which had not received full approval. Additionally, 36 accelerated approval drugs totaled $1.2 billion in Medicare fee-for-service spending during their availability period. Notably, cancer drugs comprised the largest portion of Medicare spending, while biologics were most likely to receive approval for numerous indications. A major limitation of this study is that the benefits of earlier access to treatments were not quantified and compared to the cost.

Click to read the study in AIM

Relevant Reading: Fulfilling the mandate of the US Food and Drug Administration’s accelerated approval pathway: the need for reforms

In-Depth [cross-sectional study]: This cross-sectional study examined Medicare fee-for-service spending for FDA accelerated approval drugs without confirmatory trials. In total, 45 drugs across 69 indications were identified as not having full FDA approval but being on the market through the accelerated pathway as of January 1, 2019. The average cost per claim of these medications was $8,798. Beneficiaries paid $209 million (or $1,530 per claim) in costs before considering supplementary insurance or patient assistance programs. The three drugs with the largest spending were pembrolizumab, nivolumab, and droxidopa. Drugs were on the market for an average of 3.25 years in the accelerated approval pathway. Of all accelerated approved drugs, seven were approved before 2013 and 13 before 2016. Additionally, seven drugs for 11 different indications were withdrawn in 2020 or 2021, which represented $187 million of Medicare spending. A total of $1.2 billion was spent in 2019 on accelerated approved drugs where full clinical benefit had not been confirmed. Accordingly, a policy solution would be to reduce reimbursement for accelerated approved drugs until full approvals are obtained, which would provide a financial incentive for drug companies to complete confirmatory trials while ensuring patient safety. It is estimated that savings from $80 million to more than $1 billion could be achieved depending on the specific policy.

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