Study: Increasing Medicaid Rebates on Accelerated Approvals Saves Money

Medicaid could have received to up to $5.2 billion in additional rebates during the period 2015 to 2020 if a proposed policy that increases rebates for drugs with accelerated approvals had been enacted, according to a recent study in Health Affairs. Additionally, Medicaid could have received almost $1 billion more if it had received inflationary rebates provided for in the same proposal.

This confirms a Congressional Budget Office analysis that predicted up to $1 billion over five years could be saved under the pro

In June 2021 in its report to Congress, the Medicaid and CHIP Payment and Access Commission

(MACPAC) recommended Congress require higher rebates, as well as higher inflationary rebates, for drugs approved through the accelerated approval pathway until the manufacturer has verified clinical benefit. MACPAC is a nonpartisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Department of Health and Human Services, and the states on a Medicaid and the State Children’s Health Insurance Program.

Accelerated approvals are a small but growing proportion of Medicaid spending, totaling $6.7 billion during the 2015 and 2020 timeframe.

Investigators in the Health Affairs study analyzed Medicaid spending on these drugs between 2015 and 2020. They used publicly available data on Medicaid spending before rebates. Because best price is not made public, investigators used quarterly rebate estimates from SSR Health that approximate average rebates across U.S. payers.

Investigators identified 253 accelerated approvals granted from 1992 to 2020, and they excluded 88 that had received full approval or been withdrawn before 2015. The remaining 165 approvals represented 89 drugs, of which 80% were for oncology indications.

Total gross Medicaid spending during 2015 to 2020 among all accelerated approval drugs was $9.7 billion, and rebates amounted to $3.1 billion. Additionally, 75% of the drugs had additional inflationary rebates.

The drugs with the highest estimated net Medicaid spending during the time frame studied were Merck’s Keytruda (pembrolizumab) at $947 million, Amag Pharmaceuticas’ Makena (hydroxyprogesterone caproate) at $890 million, Bristol Myers Squibb’s Opdivo (nivolumab) at $874 million, Roche’s Avastin (bevacizumab) at $537 million, and Novartis’ Exjade (deferasirox) at $460 million.

Investigators said the study had several limitations, including that data from 2015 to 2020 may not be representative of future savings. Additionally, since rebates are confidential, investigators relied on estimates in some cases.

Investigators in the Heath Affairs study cautioned about the use of additional rebates to achieve policy objectives. “Accelerated approval drugs represented only 4.2% of Medicaid drug spending in 2019,” the wrote. “Accelerated approval drugs are unlikely to be the only ones with prices out of proportion to their known clinical benefits.”

Additionally, they said this policy could be difficult to implement because many drugs with accelerated approvals are marketed for other indications.