By Douglas Holtz-Eakin & Ken Thorpe
April 9, 2021 at 5:00 am ET
What we’re beginning to see right now in budget-crunched Medicaid programs around the country are proposals to restrict patient access to breakthrough, lifesaving medications under the assumption that they are driving up state Medicaid costs.
New research published in the American Journal of Managed Care shows that drugs approved through the Food and Drug Administration’s accelerated approval pathway – medicines that address serious conditions like cancer, HIV/AIDS and rare life-threatening diseases – are not contributing meaningfully to the growth in state Medicaid spending. This study should be reviewed carefully by states that are striving to deny these accelerated approval drugs to their low-income Medicaid enrollees in the name of cost.
The FDA created the accelerated approval pathway in 1992 and Congress encouraged its expanded use in 2012 to include rare diseases. Its purpose, quite simply, is to have fewer people die while they would normally be waiting for the conventional drug approval process to take place over a period of years. Through the accelerated approval pathway, potentially groundbreaking treatments can be approved for use based on clinical trials that look at the drug’s effect on measures that the FDA agrees are likely to benefit the patient. Then, once the drug is approved for patients, studies continue to verify its benefits.
For patients battling rare diseases with no available treatments, or types of cancer without therapeutic options, this accelerated process is a godsend. It means giving people a chance for a healthier life instead of consigning them to an exacerbation of their condition or even death while they are waiting for the yearslong process to validate the benefit.
Nonetheless, states facing financial pressures and looking for ways to trim their Medicaid costs are starting to zero in on these accelerated approval drugs as an answer to their problems. Federal law requires Medicaid programs to cover FDA-approved treatments as a condition of the Medicaid Drug Rebate program, but states like Tennessee and Massachusetts have sought federal waivers that would allow them to close off their formularies to these medicines without losing access to Medicaid drug rebates.
And this week, the federal commission that gives Medicaid-specific policy recommendations to Congress is considering a proposal that would require manufacturers of accelerated approval therapies to offer state Medicaid programs higher rebates for those drugs. It’s a policy that would disincentivize exactly the kind of drug development that the pharmaceutical industry should be focused on – novel treatments for serious diseases for which patients have limited or no treatment options. These policies become all the more bewildering when you consider the significant benefits for seriously ill people and the small impact these drugs have on Medicaid spending.
Our published analysis on Medicaid spending for accelerated approval drugs found that medications approved through the accelerated approval pathway accounted for less than 1 percent of annual Medicaid spending from 2007 to 2018. And over that same time period, far from being a driver, those drugs accounted for just 1.3 percent of Medicaid spending growth.
If states want to find ways to curb their Medicaid costs, they would be well-served to look at larger targets: Hospital spending and physician services continue to represent almost half of all Medicaid dollars spent and are the most significant drivers of spending growth.
If states have their way and are able to block access to these drugs in their Medicaid formularies, we move significantly as a nation toward a two-tiered health care system in which those with money will have the innovative treatments that mean the difference between life and death, while those dependent upon Medicaid for their health care will be told that they cannot have the same lifeline. Further, the costs of caring for those with life-threatening diseases who don’t have access to effective therapies will continue to add to our overall health and societal outlays.
Drastic policy changes with severe ramifications for the citizens they serve should not progress without compelling evidence of benefit. Our research shows that there is no such evidence to justify denying lifesaving medications to those who need them.
Douglas Holtz-Eakin, Ph.D., is president of the American Action Forum and former director of the Congressional Budget Office.
Kenneth E. Thorpe, Ph.D., is the Robert W. Woodruff professor and chair of the Department of Health Policy & Management in the Rollins School of Public Health at Emory University and the chair of the Partnership to Fight Chronic Disease.
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