The Biden administration on Tuesday proposed three pilot programs aimed at lowering costs and improving access to drugs under Medicare and Medicaid, including gene therapies and medicines cleared via accelerated approval.
In the first program, the Centers for Medicare and Medicaid will test capping co-pays at $2 per month for commonly used generic drugs for chronic conditions. The other two would centralize outcomes-based agreements to improve access to expensive cell and gene therapies, and rework how CMS pays for certain drugs approved by the Food and Drug Administration on an accelerated basis “to encourage timely confirmatory trial completion.”
The payment models follow efforts begun last year to reduce Medicare drug costs through the Inflation Reduction Act, which gave CMS the ability to negotiate prices for a select number of Medicare’s top-selling drugs that lack competition. President Joe Biden later signed an executive order that called for new healthcare payment and delivery models.
CMS said it would consult with the FDA on how to implement the pilot payment program for drugs with accelerated approvals in 2023 and launch it “as soon as feasible.”
The FDA’s accelerated approval program has been under increased scrutiny because of some drugmakers’ long delays in completing confirmatory trials. CMS said it will test making “targeted adjustments” to payments to incentivize manufacturers to finish the trials.
Many details are still unclear: “We're not able to say at this point exactly what those adjustments might look like,” CMS Administrator Chiquita Brooks-LaSure said on a press call Tuesday.
But the model could open a way to pay less for drugs that have obtained speedy approvals until further evidence proves their benefit, or to vary payment based on which disease they treat.
“Structured right, this CMS proposal could allow drug pricing to match the level of evidence; enabling patients to access breakthrough drugs earlier, at lower prices, and as stronger confirmatory clinical evidence emerges, permit prices [to] adjust to reflect the proof of wider benefit,” former FDA commissioner Scott Gottlieb wrote in a tweet.
The pilot program is separate from Medicare’s restrictive policy on Alzheimer’s drugs approved on an accelerated basis, which last year limited coverage to only people enrolled in a clinical trial. CMS has faced pressure from patient groups to reconsider the policy. On Tuesday, Brooks-LaSure reiterated the agency’s message last month that it may revisit the policy based on new information about the drugs, which include Eisai and Biogen’s recently OK’d treatment Leqembi.
“We continue to be open to hearing new data from manufacturers and advocates,” Brooks-LaSure said, adding that this class of drugs “is unique … our set of decisions around that don't necessarily reflect our views of accelerated approvals more generally.”
The pilot program for cell and gene therapies, meanwhile, would seek to improve access to these one-time treatments, which can cost more than $1 million but promise many years of benefit.
CMS would attempt to set up multi-state agreements with manufacturers, allow it to pool states’ bargaining power and better link payments to outcomes. The models could be announced by 2024 or 2025 and launched as early as 2026, starting within Medicaid and likely targeted to a single disorder such as sickle cell disease.
The $2 copay model — similar to practices by retail pharmacy chains to offer a list of drugs at low-cost, fixed prices — would include about 150 generic medicines used to treat chronic conditions like hypertension for those enrolled in one of Medicare’s drug plans.