Medicare’s Discretion to Say No to Unproven Therapies, Medical Devices, and Equipment

If it is not Medicare Advantage plans over-charges tapping into Medicare funds designated for the care of seniors, it is the commercial healthcare companies such as pharma this time and again. The political influence these companies wield with legislators and probably SCOTUS justices (later as companies sue and quickly levitate to a SCOTUS hearing) who are willing to take advantage as untouchables to practices of ethical behavior is seen in the proposed legislation discussed in this article.

AB: Jetting off on private plane to some economic/political conference or enjoying a stay at some lavish destination is all it takes to acquire ones ethical behavior in your favor. Rather cheaply done for a favorable decision and the sacrifice of integrity.

Congress and SCOTUS believes this is ok. Well, it is not. There is any large amount(s) of congressional legislated funding (the generous Cures Act for one) available to companies in their quest for insane amounts of profitability based upon limited results. One might have to do a minute bit of paperwork to get it.

Protecting Medicare’s Discretion to Say No to Unproven Therapies, Medical Devices and Equipment, JAMA | JAMA Network, C. Joseph Ross Daval, Liam Bendicksen, Aaron S. Kesselheim.

Medicare, the largest health care payer in the nation, is also the single biggest source of revenue for pharmaceutical companies. Since Medicare’s creation, federal law has restricted Part B coverage to items and services that are “reasonable and necessary.” Legislation introduced earlier this year, however, takes aim at Medicare’s foundational discretion to decide whether to cover a new product.

However, these efforts are misguided. Medicare cannot and should not automatically cover every drug or device approved or cleared by the US Food and Drug Administration (FDA). Medicare’s ability to decline, limit, or condition coverage of medical products lacking robust evidence is crucial to safeguarding taxpayer dollars and protecting public health.

Two bills now in Congress would make it harder for the Centers for Medicare & Medicaid Services (CMS) to limit coverage of FDA-regulated products under Medicare Part B.

The Ensuring Patient Access to Critical Breakthrough Products Act of 2023 (HR 1691) would reinstate a rule finalized in 2021 during the Trump administration mandating 4 years of Medicare coverage of all medical devices designated as “breakthrough” by the FDA. But so-called breakthrough devices are misleadingly named:

“they do not have to be better than existing devices, they can be approved on the basis of weak evidence such as changes to unvalidated surrogate measures, and some are not subject to the premarket approval process but instead qualify for much more limited 510k review.1 Under the Biden administration, CMS wisely rescinded the 2021 final rule.”

The second bill, the Access to Innovative Treatments Act of 2023 (HR 2408), would create a process for second-guessing CMS coverage decisions for new drugs when the conditions for CMS coverage do not mirror FDA’s approved indications. This effort, too, is misguided. CMS’s coverage decisions have always been subject to judicial review, and courts have generally deferred to the agency’s expert discretion as to whether to cover novel therapies, including drugs and devices.2 

The “Access” act would not change CMS’s authority to limit coverage; instead, it would add procedural requirements, including mandatory reconsideration of any drug coverage determination that does not match FDA’s labeling. In effect, this legislation would make it easier to sue CMS over coverage determinations and thus harder for CMS to limit coverage without getting tied up in years of costly litigation.

These legislative efforts arrived on the heels of CMS’s decision to offer limited coverage for 2 controversial drugs for Alzheimer disease, lecanemab (Leqembi) and aducanumab (Aduhelm). Medicare covered both drugs only in the context of evidence generation, under a program called coverage with evidence development (CED). Both drugs were initially granted accelerated approval by the FDA on the basis of an unvalidated surrogate end point (changes to brain β-amyloid levels), and carry substantial risks of brain swelling and bleeding.

  • For aducanumab, which showed no clear evidence of clinical benefit at the time of approval, CMS offered coverage for patients enrolled in clinical trials.
  • For lecanemab, for which 1 trial showed minor benefits, CMS updated its coverage in July 2023 after the FDA granted full approval, providing coverage for patients enrolled in clinical registries that could provide more insight into the safety of the drug in routine clinical practice.

Critics attacked CMS’s approach as inconsistent with its historical approach to covering FDA-approved drugs.3 But CMS’s actions are consistent with its mandate to cover only “reasonable and necessary” therapies. Although it is true that Medicare has usually covered FDA-approved drugs, aducanumab was not the first drug for which Medicare officials restricted coverage.

For example, florbetapir (Amyvid), a diagnostic used for detecting levels of amyloid in the brain, has been covered only in clinical trials since 2013, and aprepitant (Emend) only for chemotherapy-induced nausea in combination with certain other drugs since 2013. Nonoverlap between FDA approval and CMS coverage is even more common in the context of medical devices.

Drugs and devices passing muster at the FDA should not automatically qualify for Medicare coverage. The FDA and CMS are distinct agencies with distinct missions, applying different standards in different contexts. For new drugs, the question for the FDA is usually whether the drug meets minimum standards of safety and efficacy to allow drug companies to market it nationally for a specific use. For CMS, the question is whether the drug is “reasonable and necessary” to the health of Medicare beneficiaries to merit coverage under Part B. Courts have recognized this difference, upholding CMS’s decisions to limit coverage in the face of industry challenges and dismissing FDA clearance or approval as irrelevant.

Drugs that fall within Medicare’s Part B benefit, for which CMS retains discretion to set conditions on reimbursement, are the exception. For most drugs, Medicare coverage is unfortunately intertwined with FDA approval.4 Under laws governing the Medicare Part D pharmacy benefit, Medicare effectively must pay any price set by manufacturers of FDA-approved drugs regardless of comparative benefits and risks. This is because federal law requires coverage of at least 2 FDA-approved drugs per therapeutic class, as well as virtually all drugs that fall into 6 classes, including anticancer drugs and antiretrovirals. As a result, Medicare pays staggering sums for many new drugs offering little clinical benefit to patients relative to previously existing treatments.5

The CED program used for aducanumab and lecanemab, a generous administrative response to the question of how to cover products with uncertain effects, has recently come under fire. Critics argue the forcing of CMS to pay for unproven products, regardless of the evidence for their use, will incentivize innovation.

But this conception of “innovation” conflates novelty with benefit, and change with medical advance. Spending taxpayer dollars on products not representing meaningful progress does not promote innovation. Instead, it is much more likely to slow medical progress by handing manufacturers lucrative participation trophies for risky products offering little or no clinical benefit. A system in which taxpayers are required to pay for inferior treatments is not a competitive marketplace, it is an entitlement program for for-profit companies subsidized by the public.

The importance of CMS’s coverage discretion has only grown over the past decade, as the FDA has increasingly approved drugs and devices that lack robust evidence of effectiveness (like aducanumab) or have risks that greatly outweigh their benefits for certain populations (like lecanemab).6 Congress must act to protect and strengthen Medicare’s core authority to limit coverage of medical products that it determines are not reasonable and necessary for beneficiaries. A valuable first step would be an explicit grant of authority for the CED program. CMS’s authority to offer CED has been upheld in court as an extension of CMS’s authority to pay for only “reasonable and necessary” care. However, the program’s future is uncertain due to courts’ recent shift away from deference to expert agencies’ statutory interpretations.7

AB: A deference mandated by a SCOTUS moving from acknowledged experts to a legislature with little or no knowledge to determine and greatly influenced by commercial interests.

The Medicare trust fund cannot become a blank check for any drug or device manufacturer granted authorization by the FDA. Medicare’s survival and public health demand that officials distinguish between better and worse therapies when determining reimbursement. Bills like HR 1691 and HR 2408 are a step in the wrong direction.

Footnotes for those who may have a greater interest:

1. Palmer  K, Aguilar  M. FDA’s breakthrough device program, meant to benefit patients, is delivering the biggest gains for companies. STAT. April 18, 2022. Accessed July 17, 2023.

2. Daval  CJR, Kesselheim  AS.  Authority of Medicare to limit coverage of FDA-approved products: legal and policy considerations.   JAMA Intern Med. Published online July 28, 2023. doi:10.1001/jamainternmed.2023.3961
ArticlePubMedGoogle ScholarCrossref

3. Grogan  J. Medicare’s “coverage with evidence development”: a barrier to patient access and innovation. Health Affairs Forefront. May 1, 2023. Accessed July 17, 2023.

4. Sachs  RE.  Delinking reimbursement.   Minn Law Rev. 2018;102:2307-2356.Google Scholar

5. Egilman  AC, Rome  BN, Kesselheim  AS.  Added therapeutic benefit of top-selling brand-name drugs in Medicare.   JAMA. 2023;329(15):1283-1289. doi:10.1001/jama.2023.4034 ArticlePubMedGoogle ScholarCrossref

6. Darrow  JJ, Avorn  J, Kesselheim  AS.  FDA approval and regulation of pharmaceuticals, 1983-2018.   JAMA. 2020;323(2):164-176. doi:10.1001/jama.2019.20288 ArticlePubMedGoogle ScholarCrossref

7. Daval  CJR, Bendicksen  L, Kesselheim  AS.  Eroding judicial deference to the FDA—consequences for public health.   N Engl J Med. 2023;388(11):963-966. doi:10.1056/NEJMp2215193PubMedGoogle ScholarCrossref