Raising Medicaid Rebates For Drugs With Accelerated Approval.

Area of Science:

• Health economics
• Pharmaceutical policy
• Drug pricing

Background:

• The Food and Drug Administration's (FDA) Accelerated Approval Program allows early market access for drugs treating severe conditions based on preliminary efficacy data.
• Many accelerated approval drugs are associated with exceptionally high costs, impacting healthcare budgets.
• The Medicaid and CHIP Payment and Access Commission proposed increased manufacturer rebates for these drugs until confirmatory efficacy studies are completed.

Purpose of the Study:

• To evaluate the potential financial impact of the proposed Medicaid policy on accelerated approval drug spending.
• To quantify potential savings for Medicaid by increasing manufacturer rebates for drugs approved via the Accelerated Approval Program.

Main Methods:

• Analysis of Medicaid prescription drug spending for 89 accelerated approval drugs between 2015 and 2020.
• Modeling the financial impact of increasing base rebates from 23.1% to 30-80%.
• Assessing the effect of increasing inflationary rebates by two to four times.

Main Results:

• Medicaid spent an estimated $6.7 billion on these drugs (post-rebate) during 2015-2020.
• Increasing base rebates could have saved Medicaid between $0.6 billion and $5.2 billion over the six-year period.
• Doubling or quadrupling inflationary rebates could yield additional savings up to $0.9 billion.

Conclusions:

• Accelerated approval drugs constitute a significant and increasing portion of Medicaid's drug expenditure.
• The proposed rebate policy offers substantial potential savings for Medicaid.
• Policy implementation requires consideration of drugs with multiple indications, including those with standard FDA approval.