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In a first, CMS will test paying less for drugs cleared via accelerated approval

In a first, CMS will test paying less for drugs cleared via accelerated approval

The Centers for Medicare and Medicaid Services said Tuesday afternoon that it will start testing a program to pay drugmakers less for drugs approved via the FDA’s accelerated pathway, as a way to incentivize swifter confirmatory trials.

The move represents a big shift in CMS and the federal government’s thinking. Pharma companies sometimes drag their feet on these confirmatory trials, knowing that patients and payers are still paying full price even without the complete set of clinical evidence the agency typically requires for a full approval. Congress and President Joe Biden also recently signed off on new authority for the FDA to begin requiring these confirmatory trials to begin prior to the approval.

The question that CMS’ Innovation Center now needs to answer is: Do reduced payments for accelerated approvals actually speed up confirmatory trials, facilitate earlier withdrawals of drugs that don’t prove to work, or lead to fewer payments from CMS for drugs that end up not working?

The test program comes as HHS’ inspector general said in a September report that Medicare and Medicaid spent more than $18 billion from 2018 to 2021 for 18 drugs (or 35 drug applications granted accelerated approval) with incomplete confirmatory trials that are past their original planned completion dates as of last May.

CMS said that state Medicaid agencies, which generally must cover all FDA-approved drugs with limited exceptions in order to receive federal matching funds and statutory rebates, “have requested CMS waivers to exclude coverage of drugs where confirmatory trials are delayed and where the state considers the available clinical efficacy data to be limited,” CMS notes in its report on this change and two others meant to drive down the cost of prescription drugs.

Given that many accelerated approvals have multiple indications, CMS’ CMMI is going to have to figure out a way to treat different drugs differently, as CMS acknowledges that its Part B fee-for-service drug payments “are not tied to specific indications, making a variable, indication-based pricing scheme difficult to implement.”

Drugmakers will also be very vocal in their opposition of this shift, and HHS Secretary Xavier Becerra is directing CMS to begin consultation with FDA to explore this “Accelerating Clinical Evidence Model” in 2023, and if determined appropriate, continue with a targeted launch as soon as feasible. Becerra also may direct CMS to publish an Advance Notice of Proposed Rulemaking after model development and before engaging in rulemaking, which would allow for comments from industry and other stakeholders.

Elsewhere, CMS is looking to alleviate the burden on states when million-dollar cell and gene therapies come to market. The plan is to allow state Medicaid agencies to assign CMS to coordinate and administer multi-state, outcomes-based agreements with manufacturers for certain cell and gene therapies.

And the third new model that CMMI is testing would encourage Medicare Part D plans (not physician-administered drugs) to offer a low, fixed co-payment across all cost-sharing phases of the Part D drug benefit for a standardized Medicare list of generic drugs.

“Patients picking plans that participate in the Model will have more certainty that their out-of-pocket costs for these generic drugs will be capped at a maximum of $2 per month per drug,” CMS wrote.