Revisiting Accelerated Approval: A Provocative Rebate Proposal

Formal MACPAC proposal to US Congress to consider enhanced rebates for drugs approved via the Accelerated Approval pathway could have a long shelf life in the context of debates over drug pricing – and over FDA regulatory reforms.

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Will faster development mean bigger Medicaid discounts for pharma?

A new recommendation to Congress from a commission responsible for controlling costs in the US Medicaid program is a very small idea in the context of the broader drug pricing debate – but one that could have larger implications for drug development by prompting a closer look at the Accelerated Approval pathway.

During its April meeting, The Medicaid and CHIP Payment and Access Commission formally endorsed a proposal to set:

1. A higher minimum rebate for drugs approved via AA, and

2. An additional inflation penalty for drugs with overdue confirmatory trials.

The enhanced rebates would be eliminated when the Accelerated Approval is converted to a traditional approval. MACPAC is chartered to make legislative recommendations to Congress, but there is no trigger requiring consideration of its ideas by legislators. (Also see "Higher Medicaid Rebates For Expedited Approvals Offer Modest Savings But Target Growing Concern" - Pink Sheet, 8 Apr, 2021.)

While framed as a drug pricing measure, the proposal could have a longer shelf life in the context of FDA legislation as a tool to enforce Accelerated Approval commitments. It also opens up the potentially thorny issue of whether an “Accelerated Approval” is in fact a “full” FDA approval.

The savings impact would be modest: The Congressional Budget Office estimates that total Medicaid spending on drugs approved via Accelerated Approval was about $1bn in 2019 and estimates the proposal would generate no more than $50m in savings in the first year. (The MACPAC proposal is framed in general terms without specific rebate levels; CBO assumed a 10% increase in the base rebate and a 20% increase in the inflation penalty after five years if confirmatory trials are not complete.)

That modest impact makes the proposal unlikely to receive much attention in the context of upcoming debates over using savings on drug pricing to fund a massive new infrastructure bill. Congress is likely to be looking for proposals that score in the tens (if not hundreds) of billions of dollars over the 10-year budget window in that context. (Also see "PhRMA’s ‘Better Way:’ Remember COVID Success, Tweak Part B, And Bash HR 3" - Pink Sheet, 13 Apr, 2021.)

MACPAC’s idea also competes with an alternative approach endorsed by CMS in a final rule issued in the waning months of the Trump Administration: using value-based purchasing agreements (and “best price” reporting flexibility) to structure agreements that make payment for Accelerated Approval therapies contingent on real world patient outcomes. (Also see "Value-Based Contracting: CMS Final Rule Leaves ‘Multiple Best Price’ Questions Unresolved" - Pink Sheet, 4 Jan, 2021.)

That said, the proposal offers an intriguing new approach to a long-standing concern about the role of Accelerated Approval.

The intersection of FDA and CMS policies is at the crux of the ‘Cures 2.0’ effort that is likely to feed into the user fee process.

FDA is traditionally wary of any policy that treats Accelerated Approval as something other than “full” approval – and that view is enshrined in regulation and statute. However, there is a clear disconnect between that legal construct and the public understanding of approval pending confirmation of clinical benefit.

 

The use of Accelerated Approval is routinely debated in the context of the every-five-year reauthorization of FDA’s user fee authority, and that cycle is now under way heading into the 2022 deadline. The intersection of FDA and CMS policies is also at the crux of the “Cures 2.0” effort that is likely to feed into the user fee process.

At the same time, FDA itself is looking at Accelerated Approval with fresh eyes – at least in the oncology area where the pathway is most frequently used. (Also see "Accelerated Approval: US FDA Panel To Reconsider Six Indications For Checkpoint Inhibitors" - Pink Sheet, 11 Mar, 2021.)

While there may be continued resistance to the idea that payors should “discriminate” against Accelerated Approval therapies (as in the notion of a higher up-front rebate just based on that pathway), there could also be some interest in the idea of a penalty for companies that are dilatory in delivering their confirmatory trials.

For example, MACPAC’s proposal to trigger an increased inflation penalty after a set number of years could be tweaked to be product specific: the penalty could kick in based on the timeline stipulated in the approval letter for the completion of post-marketing studies.

If nothing else, it seems like a useful way to start the discussion about whether and how to make sure that confirmatory trials are done as quickly as possible – and to consider alternatives to outright product withdrawal when they are not successful.