The Role of Accelerated Approval Drug Spending on Medicaid Spending to Treat Rare Diseases

Background The accelerated approval pathway allows drugs for serious conditions that fill an unmet medical need to be approved based on a surrogate or intermediate clinical endpoint that is reasonably likely to predict a clinical benefit. The accelerated approval process has come under criticism from some state Medicaid programs who have sought to exclude paying for medications approved through this process. To examine the role that non-oncology rare disease drug spending assumes in state Medicaid programs, we examined state spending and changes in spending on the medications overall and as a percent of total state Medicaid spending in 2017 and 2022. Results On average nationally, pre-rebate spending on accelerated approval drugs to treat non-oncology rare diseases accounted for only 0.67 percent of state Medicaid spending in 2017 and 0.84 percent in 2022. In 2017 this ranged from a low of 0.008 percent in Delaware to a high of 1.7 percent in Indiana. The results were nearly identical in 2022. These medicines are neither a primary driver of state Medicaid spending or spending growth, nor an effective target for reform. Discussion Efforts to reduce the level and growth in Medicaid spending need to target the key drivers—dual eligible and the disabled populations that account for a third of Medicaid spending. ¹ This would include providing more social services to address the determinants of health, integration of care coordination between Medicare and Medicaid and more efficient integration of the funding flows. Quite clearly, accelerated approval medications for non-oncology drugs to treat rare diseases are not contributing to the level and growth in Medicaid spending.