Medicare Spending Millions on Cancer Drugs With Unproven Benefit 

Kerry Dooley Young

October 20, 2021

Medicare has been spending hundreds of millions of dollars on cancer drugs for indications where there is no proof of clinical benefit. The point is made in two separate papers, one of which calls for a new model for establishing 'Pay for Drugs That Work.'

Medicare spent at least $569 million, inflation adjusted, between 2017 and 2019 on 10  cancer indications that had accelerated approvals and which had not been shown to offer an overall survival benefit, according to a new analysis

This estimate was developed using spending and claims information from both the traditional Medicare program and the insurer-run Advantage plans, say the authors of a  research letter published October 18 in JAMA Internal Medicine.  

"The magnitude of spending estimated in our study highlights the need for the FDA to withdraw approvals for drug indications with a confirmed lack of clinical benefit in a timely manner," conclude co-authors Mahnum Shahzad, BA, and Anita Wagner, PharmD, DrPH, of Harvard Medical School, Boston, and Huseyin Naci, PhD, MHS, of London School of Economics and Political Science in the UK.

This analysis focused on cancer indications where the US Food and Drug Administration (FDA) itself has flagged concerns about the accelerated approvals that it had granted. The team looked at 10 cancer indications for four immunotherapies — atezolizumab, durvalumab, nivolumab, and pembrolizumab — where there was a confirmed lack of overall survival benefit.  

Top FDA oncology officials had highlighted these 10 indications, which they described as "dangling" accelerated approvals, in a paper published earlier this year in the New England Journal of Medicine.

Since then, there has been a spate of withdrawals of these indications.

For example, in August, Genentech announced it would voluntarily withdraw an indication for atezolizumab (Tecentriq) for use in combination with chemotherapy for certain advanced or metastatic triple-negative breast cancer.

Other voluntary withdrawals include the liver cancer monotherapy indication for nivolumab this past July, and a bladder cancer indication for durvalumab this past February.

In a separate paper, two of the top health advisers of the Obama administration also highlighted Medicare spending on these cancer indications with unproven benefit, and  proposed a new model where the costs of these drugs would be reduced.

The "Pay for Drugs That Work Model" was proposed by Richard Frank, PhD, and Ezekiel Emanuel, MD, PhD, in a Viewpoint article published October 11 in JAMA.

Both authors have a deep understanding of federal policy. Frank served as assistant secretary for planning and evaluation in the Department of Health and Human Services, and Emanuel was a special advisor for health policy to the director of the Office of Management and Budget in the White House; Emanuel is also an oncologist specializing in breast cancer.

In framing their argument for a new approach to payment for medicine for which there is limited evidence, Frank and Emanuel noted the FDA's willingness to use surrogate markers in granting accelerated approvals for oncology drugs. These often rely on endpoints such as overall response rate and duration of response, as these are quick to measure; more traditional oncology outcomes such as progression-free survival and overall survival take longer, sometimes several years.

Frank and Emanuel note that, among 194 cancer drug indications for which accelerated approvals were given between 1992 and 2019, one third of them (64) were based on surrogate endpoints that had been used for the first time, of which 61% have no documented correlation with overall survival. And pharmaceutical companies do not always provide confirmatory data on what Frank and Emanuel call "hard" patient outcomes such as improved survival.

"Consequently, oncologists often use drugs without reliable evidence on effectiveness," they write.

Many of these cancer medicines cleared with accelerated approvals have also proven costly, Frank and Emanuel write. They estimated that in 2019, Medicare spent at least an estimated $10 billion overall and more than an estimated $4.5 billion in Part B for cancer drugs for which no confirmatory trials had been completed, citing FDA and Centers for Medicare & Medicaid Services data.

"To restrain high prices for drugs that receive accelerated approval, we propose a new policy approach at the Center for Medicare and Medicaid Innovation (CMMI): Pay for Drugs That Work," Frank and Emanuel write.

CMMI could use its power to test payment policies in this model. Starting with oncology drugs, medications cleared through the accelerated pathway would be randomized, Frank and Emanuel say. Half of the approved drugs would continue current payments under the Part B program, in which Medicare adds a premium to the reported average sales price (ASP).

But for the other half of the approved drugs, there would be an "uncertainty price," defined as 76% of the ASP for the specific cancer's existing standard care, Frank and Emanuel write. This corresponds to the discount used in setting what is called the "federal ceiling price," or the maximum price drug companies can charge for brand-name medications to the Department of Veterans Affairs.

"Once the FDA determines a positive confirmatory trial for a meaningful clinical outcome, such as overall survival, then established Medicare Part B pricing would be followed," Frank and Emanuel write. "Uncertainty pricing recognizes the indeterminate but promising value of drugs given accelerated approval and promotes prompt completion of confirmatory trials."

This CMMI model could be designed to preserve physician administrative fees. Physicians who prescribe drugs approved through the accelerated pathway would be reimbursed based on an administration fee that is equal to what is paid for the existing standard care medications, which is 6% of the ASP.

The CMMI model as outlined by Frank and Emanuel includes a deadline on completion of confirmatory trials. This would give pharmaceutical companies greater incentive to finish the studies needed to prove a significant benefit to their drugs.

"If a confirmatory trial is not completed within 4 years of the accelerated approval date (which is longer than the median time of completing confirmatory trials for oncology drugs that complete such trials), the drug will no longer be reimbursed by Medicare Part B," they write.

Influential Advisors

Two influential federal advisory panels also delved into discussions this year about reducing US government spending on medicines for which there is limited evidence of benefit.

In June, the Medicaid and CHIP Payment and Access Commission (MACPAC) recommended a path for cutting reimbursement for drugs cleared under accelerated approval. MACPAC suggested Congress increase the minimum rebate percentage on drugs sold under accelerated approvals until the manufacturer has verified the clinical benefit.

"Once the FDA grants traditional approval, the Medicaid rebates would revert back to the standard amounts," MACPAC said.

On October 7, the Medicare Payment Advisory Commission (MedPAC) began an initial discussion about how the giant federal health program might alter its payments for drugs cleared with accelerated approvals. The early signs of consensus tilted toward considering a "different pricing regime" for drugs sold under accelerated approvals, said MedPAC Chair Michael Chernew, PhD, in a summary of the discussion. The commission may dig into this issue as it prepares its 2022 recommendations for Congress.

"Since we don't really have information on clinical effectiveness, maybe we should just pay for those drugs a much lower amount, perhaps based on production costs to, in a sense, provide a strong incentive to accelerate the process of developing the clinical evidence that's really so important," said Paul Ginsburg, PhD, vice chairman of MedPAC, during the discussion.

Wagner reported receiving grants from the American Cancer Society. Shahzad and Naci have disclosed no relevant financial relationships. Frank reported receiving grant support from Arnold Ventures. Emanuel reported being a venture partner for Oak HC/FT, a partner of Embedded Healthcare LLC, a partner of COVID-19 Recovery Consulting LLC, and an unpaid board member of Village MD and Oncology Analytics. He also reported receiving speaking fees and/or travel reimbursement from numerous medical groups and finance companies.

JAMA Int Med. Published online October 18, 2021. Research Letter
JAMA. Published October 11, 2021. Viewpoint

Kerry Dooley Young is a freelance journalist based in Washington, D.C. She is the core topic leader on patient safety issues for the Association of Health Care Journalists. Young earlier covered health policy and the federal budget for Congressional Quarterly/CQ Roll Call and the pharmaceutical industry and the Food and Drug Administration for Bloomberg. Follow her on Twitter at @kdooleyyoung .

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