CMS to States: Medicaid Must Cover Drugs Approved Under AA Pathway
The Centers for Medicare and Medicaid Services (CMS) said Wednesday that state Medicaid programs must cover pharmaceuticals approved under FDA’s accelerated approval (AA) pathway.“In summary, this release clarifies that drugs that are granted ‘accelerated approval’ are drugs approved by FDA under section 505(c) of the FFDCA, and are able to satisfy the definition of covered outpatient drug, and if used for a medically-accepted indication, then the drug must be covered by state Medicaid programs if the manufacturer has an applicable signed Medicaid national drug rebate agreement for participation in the MDRP [Medicaid Drug Rebate Program]. States can use utilization management mechanisms such as prior authorization to assure appropriate use of these medications.”
Rachel Sachs, a professor of law at Washington University in St. Louis, said that the move could further financially strain states.
FDA can grant accelerated approval to a drug for a serious or life-threatening disease or condition if a surrogate endpoint is reasonably likely to predict a clinical benefit, “taking into account severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments,” or a clinical endpoint can be measured earlier than irreversible morbidity or mortality, and “is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.”
The clarification comes as Pew on Thursday released a new fact sheet on how use of state Medicaid inflation rebates could discourage drug price increases.