Study: Share of Medicaid Spending on Drugs with Accelerated Approvals Increasing

Drugs with accelerated approval represent a larger amount of Medicaid drug spending relative to their use.

Drugs approved through the FDA’s accelerated approval program represent a small percentage of the total medications used by the Medicaid population, but they account for a disproportionate share of overall drug spending, according to a recent study published in JAMA Health Forum.

Investigators in this study identified and analyzed state Medicaid programs’ use and spending on these drugs approved through the accelerated approval pathway from 2015 through 2019. They assessed national Medicaid use and gross and net (postrebate) spending on these drugs.

Investigators found that relative to all outpatient prescription drugs paid for by Medicaid, products with accelerated approval ranged from 0.2% to 0.4% of use (1.3 to 2.4 million prescriptions annually). But drugs with accelerated approval represented a minimum annual net spending on all drugs covered by Medicaid of 6.4% ($2.2 billion of $34.6 billion) in 2015 and a maximum of 9.1% ($2.5 billion of $27.6 billion) in 2018.

Estimated annual gross spending on drugs with accelerated approval ranged from $4.2 billion to $4.9 billion over 2015 through 2019, and estimated net spending from $2.2 billion to $2.6 billion.

In this study, among the top 10 drugs with accelerated approval in 2019 by net Medicaid spending are products with diverse indications, including:

  • Merck’s Keytruda (pembrolizumab) at $155.0 million to treat numerous cancers,
  • Gilead’s Truvada (tenofovir disoproxil fumarate and emtricitabine) at $147.8 million for the pre-exposure prophylaxis of HIV
  • AMAG Pharmaceuticals’ Makena (hydroxyprogesterone caproate injection) at $124.3 million to reduce the risk of recurrent preterm birth, and
  • Sarepta Therapeutics’ Exondys 51 (eteplirsen) at $123.9 million to treat Duchenne muscular dystrophy

Investigators noted that statutory and inflation-based rebates dramatically reduced spending for many of these. For example, Truvada’s estimated rebate of 67.5% reduced Medicaid gross spending from $455 million to $147.8 million and Keytruda’s rebate of 49.8% reduced spending from $308.6 million gross spending to $155.0 million.

“Prior studies have demonstrated that drugs costing more than $1,000 per claim, which is the case for many drugs with accelerated approval, made up just 1.2% of all prescription drug claims in Medicaid but 43.7% of total drug spending,” investigators wrote. “These high-cost drugs have already been identified as an area of concern for state prescription drug spending, but the broad range of products with high prices has made it difficult for states and policy makers to identify tractable policy solutions.”

They pointed out that states’ expressed concerns about the surrogate end point relied on by the sponsor and the FDA to demonstrate clinical efficacy may not be predictive of the true clinical end point.

Investigators point out that Medicaid programs outlay significant funds before an indication is removed. They cite Makena as an example. Makena was approved in 2011 based on its ability to reduce the risk of recurrent preterm birth, a surrogate for improved neonatal outcomes. In 2019, however, a confirmatory trial failed to reproduce these findings. In October 2020, the FDA proposed withdrawing the approval.

Between 2012 and 2019, state Medicaid programs spent on average an estimated $118,826,324 per year on branded Makena (net of rebates and inflation penalties).

In recent years, many of these accelerated approvals have been for oncology therapeutics. An FDA advisory committee had recommended removal of these indications when postmarketing data didn’t support approval, and companies have withdrawn indications.

Related: Study Finds Accelerated Approvals of Oncology Treatments are on the Rise

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