The FDA's fast track to higher drug prices

Some Medicaid agencies may stop paying for drugs given accelerated approvals

Most new cancer drugs provide limited relief, a sad fact invariably ignored by the breathless media when covering the latest “breakthrough.” Most new cancer drugs add months, not years, to patients’ lifespans, and sometimes the gains are only measured by the length of time it takes for tumors to resume growing.

A recent New York Times report is typical of the genre. It hailed Bristol Myers Squibb’s nivolumab (Opdivo) as a “game changer” for patients with esophageal cancer, which, the story noted, “claim(ed) the lives of such illustrious people as Humphrey Bogart, Christopher Hitchens and Ann Richards.” When used as a follow-up treatment after traditional chemotherapy and surgery (no drug has ever been shown to be effective at preventing the return of the disease), nivolumab doubled the time before the cancer resumed growing from 11 months to 22 months.

Did it prevent death from the disease, the holy grail for any new treatment? Did it at least extend life? That’s still unknown. In the anodyne words of the study’s authors (it appeared in the New England Journal of Medicine), “the longer-term effects of nivolumab on overall survival require further study.”

In 2014 nivolumab, which targets a specific mutation on cancer cells, received Food and Drug Administration approval for advanced skin cancer under its accelerated approval process. Bristol Myers subsequently won accelerated approval for more than a half dozen other cancer types, including lung and colon cancer which together strike hundreds of thousands of Americans each year.

Less data, faster approvals

Congress created the FDA’s accelerated approval process in 1992. The law gave the agency the authority to approve drugs for life-threatening diseases based on surrogate endpoints: a biomarker in the blood, an image of a tumor, or anything that reasonably suggests there will be a long-term survival benefit.

How long it takes for tumors to reappear or resume growing is the most frequently used surrogate marker for analyzing new cancer drugs. The program was expanded in 2012 to include any drug that addresses an unmet medical need (such as most rare diseases).

But the FDA’s accelerated approval process came with a caveat. Companies who win accelerated approval must commit to conducting additional clinical trials that prove the drug actually achieves a meaningful outcome — a prolonged life. The agency can order the drug off the market if the subsequent trial fails to prove efficacy.

That authority has rarely been used. The most celebrated instance came in 2011 when the FDA withdrew its approval of Genentech’s bevacizumab (Avastin) for metastatic breast cancer. The company’s follow-up studies showed the drug, which has severe side effects, did not increase survival time.

The agency has not acted in many similar cases. A 2019 study in JAMA Internal Medicine revealed just 20% of the confirmatory trials for the 93 cancer drugs granted accelerated approval between 1992 and 2017 showed a survival benefit.

Nor has it policed companies that fail to conduct the required follow-up studies. Most follow-up trials do not bother testing for long-term efficacy. They simply use the same surrogate markers as the pre-approval studies, the authors of the JAMA study found. Another study discovered more than a third of drugs that received accelerated approvals between 1992 and 2008 never completed their mandated follow-up trials.

Using the power of the purse to force change

I’ve spent a lot of time reviewing this history because today, the Medicaid and CHIP Payment and Access Commission (MACPAC) recommended by a 16-1 vote that Congress statutorily lower the price that states Medicaid programs pay for drugs receiving accelerated approval until trials establishing efficacy are completed. Several states (Tennessee and Massachusetts) have already moved to stop paying for these unproven therapies. MACPAC’s hope is that by lowering the price for all such drugs, it will put a stop to those state efforts and preserve Medicaid beneficiaries’ ability to access the ones that work.

Manufacturers already must lower the price that Medicaid pays for drugs by about 23% off its list price. The resolution called for raising that rebate until the manufacturer completes the confirmatory clinical trial. The Congressional Budget Office estimated raising the Medicaid rebates by four or five percentage points would save Medicaid agencies across the country about $1 billion. That’s not very much in the larger scheme of things, but it would send a clear signal that patients and taxpayers deserve to know whether these drugs actually work.

Unfortunately, even this modest proposal has galvanized opposition from the many surrogate actors who routinely support positions put forward by the pharmaceutical industry. Patient advocates showed up at this week’s MACPAC hearing to warn lower prices for drugs receiving accelerated approval would dry up the pipeline for better drugs for cancer and rare diseases.

Emory University’s Kenneth Thorpe, head of the Partnership for Fighting Chronic Disease, which includes numerous drug companies among its many backers, teamed up with the conservative American Action Forum’s Douglas Holtz-Eakin, a former head of the CBO, to author a study claiming higher rebates would save very little money for Medicaid. At the same time, the study said, it would “weaken Medicaid’s ability to provide affordable access to therapeutics for serious unmet medical needs.”

In a joint op-ed today on the Morning Consult website, the two authors argued lowering drug company revenue “would disincentivize exactly the kind of drug development that the pharmaceutical industry should be focused on – novel treatments for serious diseases for which patients have limited or not treatment options.”

I’m confused. It doesn’t save much money, but it’s enough to dissuade drug companies from investing in discovering new cancer and rare disease drugs.

There’s plenty of evidence to suggest the price of many new cancer drugs is already way too high given their limited efficacy. A recent analysis of nivolumab’s use in lung cancer patients, which assumed patient survival in the real world would equal what had been shown in the surrogate marker trials, showed it cost nearly a half million dollars for patients to survive for an additional year. That’s about $400,000 more than the benchmark maximum price for a drug to be considered cost-effective, according to the Institute for Clinical and Economic Review (ICER).

No wonder the United Kingdom’s National Institute for Health and Care Excellence (NICE) this week recommended against using nivolumab in lung cancer patients, one of the indications for which it’s won accelerated approval in the U.S. The British National Health Service relies on NICE recommendations in determining its payment policies.

“It is uncertain how long the effect lasts, and whether people having it live longer,” the report said.