Exclusive accelerated approval drugs comprise ‘relatively small share’ of Medicare spending

Policymakers looking to rein in Medicare spending should look beyond the lens of the accelerated approval pathway, as drugs that exclusively fall under this indication make up a small percentage of overall Medicare spending, according to a recent research letter written by Benjamin N. Rome, of the Program on Regulation, Therapeutics, And Law (PORTAL) research group at Harvard Medical School and Brigham & Women’s Hospital, and colleagues.
 
“Medicare is spending more and more each year on drugs approved through the accelerated approval pathway, up to $9.1 billion by 2019. However, most of that spending (87% over the study period) is on drugs that have other indications approved via the traditional approval pathway,” Rome said in an interview with Regulatory Focus. “This is important to keep in mind, since any policies aimed at lowering prices for accelerated approval drugs will need to determine how to handle these drugs with a mix of accelerated and traditional approval indications.”
 
In their research letter, published in JAMA Health Forum on 3 December, Rome and colleagues looked at 66 drugs (74% oncologic drugs) between 2015 and 2019 with an accelerated approval indication as well as Medicare Part B and Part D spending during the same timeframe.
 
Medicare Part D net spending was estimated through a calculation that subtracted “estimated average annual rebates and other discounts for specific drug classes based on data from a recent federal report;” Part B spending for 7 drugs was adjusted for missing data. Rome and colleagues evaluated spending when drugs were exclusive to the accelerated approval pathway compared with when drugs had accelerated and traditional indications. They also estimated overall Medicare Part B and Part D spending for accelerated approval drugs.
 
Between 2015 and 2019, Medicare Part D annual spending increased from $2.1 billion to $3.2 billion for accelerated approval drugs, while Part B annual spending during that time increased from $2.7 billion to $5.9 billion. However, drugs exclusive to the accelerated approval pathway saw decreased Part D annual spending from $0.7 billion to $0.4 billion between 2015 and 2019, and Part B spending decreased from $0.9 billion to $0.1 billion.
 
Rome and colleagues also performed a sensitivity analysis, which found similar estimated Part D spending ($3.6 billion) in 2019 for any drug under the accelerated approval pathway and $0.5 billion for drugs approved exclusively under the accelerated approval pathway. Overall, their analysis found 2.5% of $127 billion in Medicare Part D spending and 16% of $37 billion for Part B spending in 2019 was attributed to accelerated approval drugs.
 
The top three drugs with the highest Medicare Part B spending over 5 years were nivolumab at $6.8 billion, pembrolizumab at $6.1 billion and bevacizumab at $3.4 billion. For Medicare Part D, the top three drugs with the highest spending over the same time were ibrutinib at $6.6 billion, palbociclib at $1.6 billion and droxidopa at $0.5 billion.
 
 
Pricing drugs to clinical value
 
Rome told Regulatory Focus that because drug manufacturers set prices independent of the benefit a drug has for patients, policies that lower spending should “better align prices with drugs’ clinical value in order to incentivize development of the most useful drugs and avoid excess spending on drugs that don't offer much benefit.”
 
In the case of the accelerated approval pathway, the drugs approved “only have preliminary evidence of effectiveness based on surrogate endpoints” and, therefore, “it’s a reasonable idea for policy makers to target lower prices for accelerated approval drugs until the clinical benefit has been confirmed using clinical endpoints that matter to patients,” Rome said. Even so, that may not go far enough, he noted (RELATED: FDA defends Aduhelm's accelerated approval, while others call for reform, Regulatory Focus 14 July 2021.
 
“[O]ur study shows that accelerated approval drugs are still a relatively small share of total Medicare spending, so policies that address high prices for these drugs alone is insufficient to fully align price with value,” Rome added. “Most other countries routinely review new drugs and negotiate prices based on the clinical benefits, but we currently don't have anything like this in the US.”
 
 
JAMA Health Forum Rome et al.