Recent Trends in Medicaid Spending and Use of Drugs With US Food and Drug Administration Accelerated Approval
- The study examines the impact of drugs approved through the FDA’s accelerated approval program on state Medicaid spending.
- From 1992 to 2020, 216 drug-indication pairs were granted accelerated approval, with a significant increase in cancer drug approvals in recent years.
- Although drugs with accelerated approval made up less than 1% of Medicaid's total drug use, they accounted for 6.4% to 9.1% of Medicaid’s net spending on drugs from 2015 to 2018.
- In 2015, the net spending on these drugs was $2.2 billion, while in 2018, it was $2.5 billion, showing a notable financial burden despite their low usage.
- The accelerated approval program allows drugs to enter the market based on surrogate endpoints, which do not always correlate with proven clinical benefits.
- The study highlights concerns about the high costs of drugs with accelerated approval relative to their use and uncertain clinical benefits, impacting state Medicaid budgets.
State Medicaid programs have expressed increasing concern about rising prescription drug spending. Some states have expressed concern about constraints on the strategies available to them for cost containment under the Centers for Medicare & Medicaid Services (CMS) Medicaid Drug Rebate Program, a system that has been in place since 1990. Under the rebate program, state Medicaid programs that choose to cover prescription drugs must cover essentially all drugs approved by the US Food and Drug Administration (FDA). In exchange, pharmaceutical companies must provide Medicaid with substantial discounts for drugs sold under the program. Because Medicaid cannot use traditional cost-control strategies such as closed or tiered formularies (unlike other insurers), this bargain was meant to protect states’ finances as they provide access to medically necessary drugs for their populations with Medicaid coverage.
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