A recent JAMA article noted that only one-third of new drug approvals through the accelerated approval process by the FDA in the US or the conditional marketing authorization in the EU have shown therapeutic value. Many of these drugs are high cost, and this begs the question if we are spending our health care dollars appropriately. As Congress moves to improve the accelerated approval process through the Accelerated Approval Integrity Act, we must understand its history and ways to mitigate unnecessary spending while maintaining access to innovative treatments.
The Accelerated Approval Process
The accelerated approval [PDF] process dates to the 1980s, during the early years of the Acquired immunodeficiency syndrome (AIDs) epidemic. The FDA’s charge is to protect the American public’s health by evaluating drugs for safety and efficacy before a physician can prescribe them. However, at the start of the AIDs epidemic, the FDA employed its rigorous process for potentially life-saving AIDs treatments. The resulting public outrage led to a new medication approval process to address areas of high unmet need like HIV. In the accelerated approval process, the FDA utilizes surrogate endpoints for approval, followed by post-marketing surveillance. However, the number of drugs [PDF] approved in this process has increased from 2009 to 2018, and these drugs can be costly, many above $100,000 per year.
As Health Care Costs Rise, State Budgets Become Strained
In the US, health care costs continue to rise without a commiserate improvement in health outcomes. As a result, pharmacoeconomic researchers in the US and Europe have begun evaluating whether accelerated approval drugs provide clinical and economic value. In 2022, Vokinger and Hwang studied drugs given accelerated approval in the US or conditional marketing authorization in the EU from 2007 to 2021 and compared that to therapeutic value assessments conducted by the German, French, and Canadian health technology assessment (HTA) agencies. They discovered that only 36% of cancer therapeutics and 53% of the non-cancer drugs had high added therapeutic value compared to existing treatments.
A 2021 Precision Advisors white paper reflects on European countries’ financial pressures and the development of managed entry agreements or “contracts between the company and the HTA body/payer that support patient access contingent upon meeting financial or clinical criteria.” However, no such arrangement exists in the US, a challenge for individual states. A 2021 JAMA article reviewed overall Medicaid drug spending on accelerated approval drugs relative to percent use and found it disproportionate. Of all pharmacy-related expenditures in Medicaid, more money went to accelerated approval drugs than those with completed trial data. Because many states must balance their finances yearly, Medicaid programs function on a tight budget. Therefore, states spending money in one area must take from another. At the same time, for states to receive government funding for Medicaid, they must maintain an “open formulary,” i.e., cover all drugs. While states do manage their formulary in a number of ways, via preferred drug lists, prior authorizations, maximum allowable cost programs, rebates, and purchasing pools across multiple states, this regulation may limit Medicaid agencies’ ability to allocate resources per their community’s needs.
How States Have Responded
The CMS Innovations Center and the Secretary of the U.S. Department of Health and Human Services provide opportunities for states to conduct demonstration projects that promote innovation. Using this lever, two states have pushed back on the open formulary requirement, Tennessee and Oregon, through the Medicaid 1115 Waiver program, with concerns over the accelerated approval process. TennCare had a closed formulary waiver approved under the Trump administration. However, multiple stakeholders challenged this in court and ultimately removed [PDF] it. Oregon has a pending waiver request to restrict drugs under the accelerated approval process if the internal state process does not find them to have clinical benefits. If Oregon implements this waiver, we may see more states move in the direction of controlling drug prices by limiting formularies.
The Accelerated Approval Process Has Risks But Critical Benefits as well.
The FDA implemented the accelerated approval process to increase access to life-saving drugs. It allows early access to treatments for rare diseases and cancers, as large, randomized trials may not be feasible. Our experience with the COVID-19 pandemic highlights the importance of a truncated approval process based on limited data. Vaccines approved under the Emergency Use Authorization Act saved over a hundred thousand lives in the U.S. At the same time, the approval process puts states and insurers at risk for spending on what may turn out to be ineffective therapies, diverting funds from other necessary and proven treatments. In addition, since many of these drugs are high-cost, they fuel the increasing drug spending in Medicare Part B and D.
Risks of Reform
Limited access to accelerated approval drugs to manage budgetary needs may lead to several unintended consequences.
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Inequities in treatment access will broaden.
If states limit access to accelerated approval drugs in Medicaid, the most vulnerable of our population may not receive potentially life-saving treatments. Lack of pharmacoequity leads to disparities in access to care amongst low-income and racial groups. Of course, this may be a good thing or a bad thing. If post-marketing studies reveal a drug is ineffective or, worse, unsafe, these groups may have been spared. States who implement restrictions should conduct policy evaluation studies to ensure health equity and course correction if necessary. Medical policies have contributed to structural racism in the past; CMMI policies must not become a contributor. At the same time, states need control over internal resources to match the needs of their communities. CMS must look for ways to help states manage resources with more autonomy if CMMI denies state waiver programs.
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Lower utilization will impair post-marketing surveillance.
Unlike COVID-19 vaccines, many accelerated approvals only have data on small populations. Therefore, in states with limited access, pharmaceutical companies may be challenged to find sufficient real-world data for evidence generation. Delays in post-marketing surveillance studies will hamper final approval or recognition of ineffectiveness. The FDA is already under pressure to enforce the completion of such trials, and policies to limit access will hinder them. Pharmaceutical companies and the FDA will need to develop post-marketing surveillance policies that account for the difficulty in obtaining real-world data for small populations.
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Investment in innovative treatments may decline.
Pharmaceutical companies invest in drugs for rare diseases because of the potential profits. If barriers to access limit financial returns, an investment may decline. The Congressional Budget Office assessment of the Inflation Reduction Act on drug prices on innovation suggests that about 1% of drugs will not come to market. This loss may seem acceptable; however, there could be unintended consequences. Drug pricing caps may threaten the leadership of the US in the R&D sector. According to a working paper from the National Bureau of Economic Research, price controls can reduce investment to levels found in non-U.S. markets. Voters need to decide how they want the health system to function, how much innovation we should have and how much we should pay for it.
Every policy decision has pros and cons. Policymakers must anticipate unintended consequences and implement evaluation programs to assess them. As we become more enlightened about the detrimental effects and costs of health inequities, we must be vigilant in monitoring and addressing them. Finally, voters must be informed and engage in the political process. The American People must decide how the government spends tax dollars and what risks we should take.
