Study Estimates $1.8 Billion in Medicare Spending on Accelerated Approval Drugs

The US federal government spent about $1.8 billion in Medicare funds in 2019 on drugs whose clinical benefits have yet to be confirmed by the Food and Drug Administration, according to a new study by Johns researchers. Hopkins Bloomberg School of Public Health.

The FDA approves about 50 new drugs each year after clinical trials and data analysis demonstrate a drug’s safety and effectiveness. To expedite the availability of potentially beneficial new drugs for critically ill patients, some of these new drugs are approved through the FDA’s accelerated approval pathway. The program authorizes drug approvals based on what is called a surrogate endpoint. This usually involves a biological parameter, such as tumor size, but not a clinical benefit, such as improved survival. Under the program, pharmaceutical companies are then required to demonstrate the drug’s clinical benefits through a confirmatory trial.

The study found that these confirmatory trials can take years, with some drugs having been on the market for more than five years without any confirmed clinical benefit.

The results were published online May 23 in the Annals of Internal Medicine.

Some patients end up taking drugs for years that have not yet been proven to work when they could be taking other, more effective drugs. Patients and the government are paying dearly for drugs that may not work.”

Gerard Anderson, PhD, professor in the Bloomberg School’s Departments of Health Policy and Management and International Health

Medicare is the federal program that insures Americans age 65 and older and people under age 65 with disabilities. In their analysis, the researchers identified 45 drugs with 69 indications; use for specific diseases or conditions; in the accelerated program approved by the FDA in 2019. Using anonymous Medicare claims data, the researchers found that Medicare’s fee-for-service program spent $1.2. billion out of 36 such drugs in 55 indications in 2019. The majority – 45 indications or 82 percent – were for cancer-related indications. This accounted for 72% of Medicare spending on fast-track approved drugs in 2019. Overall, Medicare beneficiaries incurred $209 million in out-of-pocket spending on these drugs in 2019. Total Medicare spending on these drugs in 2019 were $1.8 billion.

The study found that seven drugs for 11 indications were removed from the FDA fast track in 2020 and 2021. These seven drugs for 11 indications accounted for approximately $187 million in Medicare fee-for-service expenditures in 2019 The authors note that additional guidance may be removed this year and in the future.

Under the current system, which dates back to 1992, pharmaceutical companies have little financial incentive to conduct additional clinical trials to confirm a drug’s full benefits, because drugs can be fully marketed under the fast-track approval program. The authors of the study suggest setting a cap on how long fast-track drugs are on the market before confirming clinical benefit. Another possible incentive would be for Medicare to provide lower payments for drugs that have not demonstrated clinical benefit.

The authors recommend that Congress reconsider the FDA’s fast-track approval pathway when the FDA’s Prescription Drug User Fee Act is reauthorized later this year. The law requires drugmakers to pay fees that facilitate the agency’s regulation and review of prescription drugs, funds that currently make up about half of the FDA’s $6 billion budget.

“We want to make sure people are taking drugs that work,” Anderson adds. “The government shouldn’t be spending money on drugs that don’t have such a guarantee for such a long time.”

“Medicare Spending on Drugs With Accelerated Approval” was co-authored by Jeromie Ballreich, Mariana Socal, Charles L. Bennett, Martin W. Schoen, Antonio Trujillo, Andrew Xuan, and Gerard Anderson.

The study was supported by the Laura and John Arnold Foundation.

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