This past year featured many significant developments in the prescription drug policy area, most notably the passage of significant prescription drug pricing reform legislation and a range of developments involving the Food and Drug Administration’s (FDA) accelerated approval program. In this post, I review five key developments from the past year and offer five items to watch for in 2023.
Looking Back: 2022
The Inflation Reduction Act
In August, Congress passed (and President Biden signed into law) the Inflation Reduction Act (IRA) of 2022, which includes three substantial reforms to Medicare’s existing system of drug pricing reimbursement (summarized in more detail here). Most notably, the IRA provides the Centers for Medicare and Medicaid Services with the authority to negotiate the prices of certain high-cost drugs for the Medicare program, though Medicare’s authority to negotiate drug prices is more limited in various ways than had been proposed in previous drug pricing reform packages (such as H.R. 3, which passed through the House of Representatives in 2019). The Congressional Budget Office (CBO) has estimated that the drug price negotiation provision of the law alone is likely to save the federal government nearly $100 billion over the next decade, even though the negotiation program does not take effect until 2026.
The IRA also attempts to limit pharmaceutical companies’ efforts to increase the prices of their existing drugs by requiring companies to pay rebates back to Medicare for price increases that outpace inflation. This policy has worked effectively in the Medicaid context for decades, and despite the current high inflation rates, the government has estimated that manufacturers still raised the prices of over 1,200 products more rapidly than inflation between July 2021 and July 2022. CBO has estimated that the IRA’s inflationary rebate provisions are likely to save the federal government roughly $56 billion over the next decade.
Finally, the IRA restructures Medicare Part D’s benefit both to provide seniors with new financial protections and also to change existing incentives for Part D plans and manufacturers. Specifically, beginning in 2025, the IRA newly caps seniors’ out-of-pocket costs at $2,000 and includes a range of additional financial protections (including a $35 out-of-pocket cap on insulin that takes effect in 2023). The redesign also decreases Medicare’s own responsibility for spending in the catastrophic phase of the Part D benefit, increasing plans’ and manufacturers’ responsibilities accordingly. CBO has estimated that the Part D benefit redesign is likely to cost the federal government nearly $30 billion over the next decade, as it is expected to increase seniors’ utilization of medically necessary drugs that they may have difficulty affording at present.
The IRA represents a significant political achievement for Democrats, even as its reforms are narrower than those sought by many in the party over the last few years. Its benefits will also primarily be felt by the one-in-five Americans who are eligible for Medicare, leaving out other Americans who may also have difficulty affording their prescription drugs. Nevertheless, the IRA enables the Biden Administration to demonstrate its success where previous administrations have failed. Although the Senate Finance Committee in 2019 under the leadership of Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) advanced a bipartisan drug pricing reform package out of committee that would have included two of the IRA’s three main elements (inflation rebates and Part D restructuring), then-Senate Majority leader Mitch McConnell (R-KY) did not hold a vote in the Senate on the topic. And although former President Trump advanced a range of ambitious drug pricing policies through the rulemaking process, including a rule that aimed to lower drug spending in Medicare Part B by tying Medicare rates to lower prices paid abroad, foreseeable administrative and legal problems meant that none of those policies were ultimately implemented.
FDA User Fee Legislation
Having passed the last FDA user fee reauthorization bill in 2017, in 2022 Congress once again debated and enacted this must-pass legislation (denominated as PDUFA VII), though in a more politically complicated fashion than was the case in the previous user fee reauthorization. Throughout the late spring and early summer, the relevant Committees in the House and Senate constructed and debated their user fee reauthorization bills. Both sets of bills included the necessary user fee reauthorizations for FDA approval of drugs, medical devices, generic drugs, and biosimilars, but as has become common practice, both sets of bills also included a wide range of additional legislative reforms.
Both bills included reauthorizations of various FDA programs, such as a series of orphan drug grants, third-party medical device inspections, the Best Pharmaceuticals for Children Program, the Critical Path public-private partnership program, and other initiatives. (Both bills also included efforts at accelerated approval reform, which I consider in more detail below.) The more-ambitious Senate bill included reforms to FDA’s regulation of cosmetic products, dietary supplements, and diagnostic tests, while the House bill prioritized efforts to promote diversity in clinical trials and competition in prescription drug markets.
There was little controversy over user fee reauthorization in the House, where the Energy & Commerce Committee unanimously voted its version of the bill out of committee; the bill then passed the full House on a 392-28 margin. The Senate Health, Education, Labor & Pensions (HELP) Committee passed that chamber’s more ambitious (and more controversial) bill out of committee, but Ranking Member Richard Burr (R-NC) later unexpectedly re-introduced a “clean” user fee bill that included only the bare minimum user fee reauthorizations and none of the proposed policy reforms (even those he had worked to craft).
Congressional passage of this “clean” user fee bill not only excluded reauthorizations of the proposed policy reforms advanced in both chambers, but also jeopardized reauthorizations of other FDA programs as noted above, from orphan drug grants and medical device inspections to incentives for pediatric research and public-private partnerships. The bill as passed included reauthorizations of these programs until December 16, rather than for the five years for which it reauthorized FDA’s user fees, in an effort to urge the parties back to the bargaining table.
Ultimately, many—though not all—policy proposals from the versions advanced through both chambers made it into the year-end omnibus bill. The omnibus included reauthorizations of these other long-standing FDA programs, but also created new authority for FDA to regulate cosmetic products (as sought by the Senate) and to encourage diversity in clinical trial enrollment (as sought by the House). But the omnibus did not include reforms to FDA’s regulation of dietary supplements or diagnostic tests, or other provisions sought by various legislators.
Accelerated Approval Reforms
FDA’s accelerated approval pathway permits the agency to approve drugs for serious conditions based on surrogate endpoints that are “reasonably likely” to predict clinical benefits, rather than those clinical benefits themselves. Over the last few years, scholarly and policy criticism of this pathway has increased significantly. The agency’s June 2021 approval of Biogen’s aducanumab (Aduhelm) for the treatment of Alzheimer’s disease was a significant event in this progression, and 2022 saw two sets of efforts to respond to this increasing criticism, one legislative and one regulatory.
First, both the House and Senate PDUFA bills included potential reforms to the accelerated approval process, at least in part in response to requests from FDA itself. Both bills would have provided stronger legislative authority for the agency to ensure that confirmatory trials are completed more quickly, including explicit statutory authority for the agency to require them to be underway at the time of approval. Both also included elements purporting to strengthen the agency’s expedited withdrawal procedures for accelerated approval indications, though it is less clear if the legislation as drafted would have achieved these latter goals. However, Senator Burr’s change of heart over the inclusion of policy reforms in the UFA package initially threatened these reforms to the accelerated approval program. Ultimately, the omnibus did include versions of both of these reforms, along with additional reporting requirements for companies and the creation of an intra-agency coordinating council for the program.
Second, though, the agency itself (or at least its Oncology Center of Excellence, under the leadership of Director Dr. Richard Pazdur) has taken steps to more forcefully enforce its existing authority in this area. Dr. Pazdur has taken steps to encourage or force the withdrawal of “dangling” approvals—those indications or drugs “for which confirmatory trials did not verify clinical benefit” but which remain on the market—and the number of such withdrawals has significantly increased relative to prior enforcement. Dr. Pazdur has also stressed the importance of having confirmatory trials underway at the time of approval, not only expressing this goal publicly but also publishing research demonstrating that drugs for which confirmatory trials are ongoing at the time of approval have a shorter time to the generation of evidence to either support or reject clinical benefits.
Although legislative reforms are certainly useful to the agency, Dr. Pazdur’s policy focus demonstrates the ways in which greater agency attention to enforcing the existing terms of the accelerated approval program could significantly improve not only the actual operation of the program but also the public’s perception of its legitimacy. To the extent that this work has focused on the oncology context, it may depend on the initiative of particular agency officials, and other therapeutic areas may not benefit from these changes.
The Aduhelm Aftermath
The controversy over FDA’s 2021 Aduhelm approval continued to reverberate into 2022 (and the start of 2023) in two main ways that go beyond the aforementioned accelerated approval reform proposals. First, Medicare issued its anticipated National Coverage Determination (NCD), under its authority to provide coverage only for products that are “reasonable and necessary” for patients, detailing the circumstances under which Medicare would pay for Aduhelm. Medicare took the rare step of limiting coverage for Aduhelm (and other anti-amyloid monoclonal antibodies for the treatment of Alzheimer’s that had not demonstrated clinical benefits) under its Coverage with Evidence Development program, in which coverage is provided only for Medicare beneficiaries enrolled in approved trials. Although this was an atypical step for Medicare, it reflected the atypical circumstances of Aduhelm’s approval, in which no member of the advisory committee had voted to approve the drug, three committee members had resigned in protest after its approval, other pharmaceutical regulators had declined to approve the drug, and at least some private payers had declined to pay for the drug.
Second, when FDA approved Aduhelm (and when Medicare issued its NCD), it was known that a large number of other anti-amyloid monoclonal antibodies were in development. Some of these antibodies (crenezumab, gantenerumab) did not demonstrate statistically significant clinical benefits in their relevant clinical trials. Another (donanemab) has shown greater ability than Aduhelm to reduce amyloid plaque levels (a surrogate endpoint), and an FDA decision on whether to grant accelerated approval is expected by early February. However, as studies of donanemab to confirm the clinical benefits of this surrogate endpoint have yet to be completed, patient access may be limited under the terms of the NCD even in the event of an FDA approval.
Importantly, though, one anti-amyloid monoclonal antibody – lecanemab – has shown not only significant amyloid-reducing capabilities but also has demonstrated statistically significant benefits on common measures of cognition and function—the drug was able to slow the progression of Alzheimer’s relative to patients who did not receive the drug in clinical trials. However, many questions remain about lecanemab, including about whether these results translate into clinically meaningful effects. After 18 months of treatment, patients receiving the drug scored 0.45 points better on the relevant cognitive test than did patients receiving the placebo. But as previous research suggests that a difference of “1 to 2 points” on the scale is the “threshold for an observable change,” the drug may only have a “modest benefit,” if any, for patients.
When this small improvement is coupled with potential safety concerns, including three reported deaths of patients receiving lecanemab, it is not yet clear how Medicare’s NCD will be impacted. FDA granted accelerated approval for lecanemab in early January, though its decision on traditional approval is expected to take longer.
FDA’s Continued Expansion Of Regulatory Flexibility
FDA’s controversial approval of Aduhelm occurred under the leadership of Dr. Billy Dunn, the Director of FDA’s Office of Neuroscience. Since then, Dr. Dunn has continued to push the boundaries of FDA’s regulatory flexibilities. One recent example occurred in the context of Amylyx’s Relyvrio, for the treatment of amyotrophic lateral sclerosis (ALS). A March 2022 FDA advisory committee voted narrowly (4-6) against approving the drug, suggesting that the evidence from the single available study was not yet sufficient to warrant an approval.
After Amylyx submitted additional data from its existing trial and its open-label extension (which enrolls participants in earlier studies for longer term analysis), Dr. Dunn reconvened the advisory committee. Although he acknowledged that existing clinical trial data may not satisfy the agency’s typical requirements, he heavily emphasized FDA’s regulatory flexibility, and—perhaps most noteworthy—publicly asked Amylyx if it would voluntarily withdraw the drug should FDA approve it and its confirmatory trials fail to demonstrate a clinical benefit. The company agreed (albeit with less clarity than it could have), and several advisory committee members cited this fact in voting (7-2) to approve the drug. Relyvrio was subsequently approved.
However, FDA’s approval documents for the drug do not reference Amylyx’s withdrawal commitment or even the need to complete post-approval studies. One complication here is precisely that Relyvrio was not approved through the accelerated approval pathway, which permits the agency to require the completion of confirmatory clinical trials as a condition of approval. Indeed, the FDA briefing documents noted Relyvrio’s ineligibility for accelerated approval. Dr. Dunn appears to be relying at least in part on Health Canada’s approval of Relyvrio (there called Albrioza) under its “conditional approval” pathway, in which Amylyx must complete its Phase III trial to retain marketing authorization in Canada.
In a case that falls in between FDA’s legal authority under its accelerated approval pathway and its more traditional “substantial evidence” standards, Dr. Dunn has demonstrated a willingness to use nontraditional strategies to push the boundaries of FDA’s regulatory flexibility. To the extent that Dr. Dunn continues to do so, his decisions may have ramifications for public trust, payer coverage, and the level of evidence patients and clinicians have as they make important treatment decisions.
Looking Ahead: 2023
Here are five drug policy issues to watch.
Having passed the IRA and its substantial reforms to Medicare drug reimbursement, CMS must now turn to implementing the law. This work is already underway, and elements of the law (such as inflationary rebates) with long histories in other public programs are scheduled for implementation on shorter timeframes, likely due to the agency’s existing experience with their administration. But CMS will need to make significant steps toward setting up its negotiation program, and by the early fall, CMS will announce the first Medicare Part D drugs selected for negotiation (though those negotiated prices will not go into effect until 2026). The pharmaceutical industry has not yet sued to challenge the law or implementation actions, but such litigation may arrive in 2023.
Drug Pricing Reform Beyond The IRA
Although the IRA’s reforms are significant, they leave out many important areas of drug pricing reform, and they apply primarily to Medicare. The Biden Administration has displayed an interest in expanding its efforts along both of these dimensions. President Biden instructed the CMS Innovation Center to submit a report “enumerating and describing” any new models it aims to pursue for lowering drug costs within Medicare and Medicaid; that report is due in early 2023. President Biden has also indicated interest in expanding some of the provisions of the IRA, especially its provisions lowering the cost of insulin, outside the Medicare context.
Senate HELP Committee Policy Efforts
In the next congress, the Senate HELP Committee, with its jurisdiction over FDA, National Institutes of Health, and other health-related programs, is likely to be chaired by Senator Bernie Sanders (I-VT), with Senator Bill Cassidy (R-LA) as the Ranking Member. Senator Sanders has stated that he plans to focus on “universal health care” and “lowering the cost of prescription drugs,” among other priorities. Senator Cassidy, a physician, has similarly displayed an interest in drug pricing reform, and his 2019 op-ed laying out options for paying for costly gene therapies may now be more relevant in light of FDA’s recent approval of a new $3.5 million gene therapy for hemophilia. To be sure, some of these issues may be more fully within the jurisdiction of the Senate Finance Committee (with its authority over Medicare and Medicaid), but the HELP Committee’s activities will be interesting to watch.
Forthcoming FDA Decisions
In 2023, FDA will be called upon to make a series of decisions regarding the approval—and the withdrawal—of various products, decisions that will impact the above-described issues. In early 2023, FDA granted accelerated approval for lecanemab and will face deadlines regarding the accelerated approval of donanemab, though its decisions regarding lecanemab’s traditional approval may be made later. FDA may also release its decision regarding the revocation of approval of Makena, an accelerated approval drug whose confirmatory trial (released in 2019) did not demonstrate the anticipated clinical benefit. Unlike the voluntary withdrawals many (though certainly not all) manufacturers of oncology products have been willing to engage in under the program, Makena’s manufacturer has resisted withdrawing the drug. But after a public hearing in October 2022, including a 14-1 advisory committee vote to withdraw the drug from the market, FDA may be nearing a final decision on the subject.
Continuing To Check In On Judge Reed O’Connor
For the last several years (here, here, here, and here), this year-in-review post has featured cases before federal district Judge Reed O’Connor. Judge O’Connor agreed with the Republican state Attorneys General challenging the Affordable Care Act (ACA) and struck down the entire law in California v. Texas, though the Supreme Court ultimately rejected the challenge in 2021 in a 7-2 vote. Since 2020, Judge O’Connor has been in charge of yet another challenge to the ACA, this one attempting to invalidate the law’s requirement for insurers to provide coverage for preventive products and services (including many pharmaceutical products) with no out-of-pocket costs.
In September 2022, Judge O’Connor again ruled for the challengers, holding that the requirement for commercial plans to cover certain products and services recommended by the United States Preventive Services Task Force (including everything from cancer screenings like colonoscopies and mammograms to prenatal screenings to a range of services for children) violated the constitution. What remains to be seen, however, is what remedy Judge O’Connor will award. The challengers are seeking to enjoin the preventive services requirement nationwide, which could have the effect of imposing cost-sharing for roughly 150 million Americans for these important preventive products and services. The government has instead urged Judge O’Connor to rely on recent Supreme Court precedent that has narrowed remedies in cases involving this type of constitutional issue, limiting the impact of his decision. Briefing on the scope of the remedy will end in early 2023, and Judge O’Connor may make his choice later this year.
Prescription drug policy continued to be the site of significant policy energy in 2022, with the culmination of long-debated political efforts, particularly in the drug pricing reform context. Over the next year, key stakeholders will have important decisions to make regarding the implementation and extension of these types of policy initiatives.
The author sits on the Midwest Comparative Effectiveness Public Advisory Council of the Institute for Clinical and Economic Review (ICER), but was not involved in ICER’s evaluation of either Aduhelm or of Relyvrio. The author also receives grant funding from Arnold Ventures on a project examining the relationship between FDA’s accelerated approval pathway and state Medicaid programs.