The Centers for Medicaid and Medicare Services (CMS) announced a model on February 14, 2023 that would allow CMS to pay less for drugs approved via FDA’s accelerated approval pathway before a clinical benefit has been confirmed by the required confirmatory studies. CMS stated:

Some drugs are approved before they have established evidence of improvement in a clinical endpoint, which is called accelerated approval. CMS would develop payment methods for drugs approved under accelerated approval, in consultation with the Food and Drug Administration, to encourage timely confirmatory trial completion and improve access to post-market safety and efficacy data. This would reduce Medicare spending on drugs that have no confirmed clinical benefit.

In a US Department of Health and Human Services (HHS) report in response to President Biden’s executive order on lowering prescription drug costs, HHS stated:

[The model] would adjust Medicare Part B [fee for service] payment amounts for Accelerated Approval Program (AAP) drugs to give manufacturers an incentive to expedite and complete confirmatory clinical trials. Working in consultation with FDA, CMS could consider various approaches to adjust payments to the provider for AAP drugs, seeking to balance incentives for developing novel treatments with potential harms of delayed confirmatory clinical trials. Any adjustments would be structured in a manner that attempts to avoid penalizing physicians or beneficiaries for choosing (or avoiding) an accelerated approval treatment. By incentivizing timely confirmatory trial completion, CMS could enable improved access to post-market safety and efficacy data.

Exactly how the new payment structure will work, how widespread the model will be, and how CMS will consult with FDA is yet to be seen. There are, however, multiple challenges and potential consequences associated with the model:

• As noted by HHS, “drugs with multiple indications make up a large portion of accelerated approvals,” and “CMS Part B fee-for-service drug payments are not tied to specific indications, making a variable indication-based pricing scheme difficult to implement.” Per the report, HHS will “consider the need to treat certain AAP drugs differently (e.g., drugs with multiple indications)” and will explore “options to appropriately address cases where a drug may have multiple confirmatory trials in progress for multiple indications.” How this ultimately plays out may impact how sponsors sequence development of a product for multiple indications.
• The proposed approach has the potential to decrease patient access to drugs for serious conditions with unmet needs. Specifically, for investigational products, the program may disincentivize future product development and investment. Additionally, for products that are currently approved under the accelerated approval pathway, the program may discourage sponsors from pursuing the required post-approval studies and maintaining the product approval in the United States.

The secretary of HHS has directed CMS to begin consultation with FDA regarding the implementation of the proposed model and, “if determined appropriate, continue development thereafter with a targeted launch as soon as feasible.” The HHS report further states that the secretary may direct CMS to publish an advanced notice of proposed rulemaking regarding the developed model before engaging in rulemaking.

Given the implications of this model, product sponsors, healthcare providers, and patient groups should consider early engagement with regulators around this issue. There may also be congressional activity and oversight concerning this model, including on the part of trade organizations.

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