Pricing and Economic ConsiderationsWhile the FDA’s draft...

Pricing and Economic Considerations

While the FDA’s draft guidance focuses on clinical efficacy, the economic sustainability of Accelerated Approval drugs remains a critical issue. In 2023, the high costs of Accelerated Approval drugs and uncertainty of clinical benefits prompted MedPAC — a quasi-independent body that advises Congress on Medicaid/Medicare issues — to recommend legislative reforms.[19] These recommendations included capping payments for Accelerated Approval drugs until a manufacturer can verify a drug’s clinical benefit. MedPAC also proposed creating a valuation system to assess the initial price of these drugs involving setting a cap based on estimated value while awaiting confirmation of clinical benefit and implementing rebates to refund the difference between the capped price and the average sales price once clinical efficacy is proven. How such a valuation would be determined remains unclear, as there is no standardized formula for measuring the value of an unconfirmed drug.[20] MedPAC recommended using bundled pricing to group drugs with similar health effects, reducing Medicare Part B’s average-sales-price-based add-on payments for high-cost drugs and introducing fixed-dollar caps.