Ensuring the FDA Accelerated Approval Process Works for Medicaid  

Updated February 28, 2025

State policymakers have struggled with the unintended consequences of the Food and Drug Administration (FDA) accelerated drug approval process for state Medicaid drug coverage. The federal requirement for Medicaid to cover all FDA-approved drugs inhibits state Medicaid agencies from using best-available evidence to design and manage their drug coverage policies. State Medicaid programs must cover a drug for populations not studied in clinical trials and for whom the risks of the drug are unknown. Moreover, they cannot curtail coverage when the FDA recommends a drug be withdrawn, or when peer-reviewed literature demonstrates that a drug’s risks outweigh its benefits.  

The Medicaid Evidence and Review of Cost Initiative (MERCI) research conducted by the Center for Evidence-based Policy at Oregon Health & Science University used a series of case studies to identify policy opportunities to refine Medicaid coverage of FDA accelerated approval drugs while taking needed and appropriate steps to protect people made vulnerable by serious and life-threatening disease.  

How Do the Accelerated Approval Program and Medicaid Interact? 

The accelerated approval program was designed to allow for speedier approval of a drugs for serious or life-threatening conditions. Whereas the FDA’s traditional approval process requires a phase 3 clinical trial measuring a clinical endpoint or a validated surrogate endpoint, accelerated approval only requires a phase 2 clinical trial, often with a smaller number of participants and a surrogate endpoint that is required to only reasonably be correlated to a clinical marker of the disease. (See Figure 1). 

Figure 1. Clinical trial characteristics by phase 

 As a result, when considering treatment with an accelerated-approval drug, patients, their families, and care teams must make their own calculation about whether the potential benefits of the drug outweigh its potential risks. This is no small matter, as postmarket safety events (new boxed warnings, safety communications, or withdrawal of drug from the market) are more frequent among those drugs receiving accelerated approval. 

Private insurance companies and Medicare have the authority to exclude an accelerated-approved drug from coverage if clinical trial evidence is weak. Medicaid, however, must comply with the Medicaid Drug Rebate Program and cover all FDA-approved drugs, including accelerated approval drugs, with very limited exceptions. In nearly all cases, Medicaid cannot choose to exclude a drug from coverage, cannot limit coverage to exclude a population for which there is no clinical trial evidence, and cannot recommend a dose regimen deemed more effective or safer in peer-reviewed literature. These limitations curtail the ability of state officials to take common-sense steps to protect vulnerable Medicaid members and also ensure that covered drugs provide the best value for the tax dollars spent. For example, an estimated 20,000 Medicaid members (per  year) took Makena (hydroxy-progesterone caproate), a drug indicated for the reduction of risk of preterm birth, during the three years between FDA’s recommendation for the drug’s withdrawal and the completion of the drug manufacturer’s appeal.  

How to Better Manage the Risks of Accelerated Approval  

Each MERCI drug brief is a case study which includes the clinical trial evidence used for FDA approval, the prevalence of the drug’s indication among Medicaid members, and the costs to Medicaid. The MERCI team has analyzed six accelerated approval drug therapies in a published brief: 

• Sickle cell disease: voxelotor (Oxbryta) 
• Duchenne muscular dystrophy: exon-skipping drugs (casimersen [Amondys 45], eteplirsen [Exondys 51], golodirsen; [Vyondys 53], and viltolarsen [Viltepso]) 
• Non–small cell lung cancer: sotorasib (Lumakras) 
• Cervical cancer: tisotumab vedotin-tftv (Tivdak)
• Reduction of preterm birth: hydroxyprogesterone caproate (Makena)
• Transfusional iron overload: deferiprone (Ferriprox)
• Cancer: Pembrolizumab (Keytruda)
• Spinal Muscular Atrophy: Onasemnogene Abeparvovec xioi (Zolgensma)

Based on these case studies, we find there is an opportunity to improve the policy framework between the Centers for Medicare and Medicaid Services (CMS) and the FDA to better manage the risks of accelerated approval, particularly safety risks to Medicaid members. Based on MERCI briefs, specific opportunities to enhance Medicaid coverage of FDA accelerated approval drugs include: 

• Requiring manufacturers to complete and publicly disclose semiannual progress reports about confirmatory trials to demonstrate drug safety and clinical effect, including the number of participants recruited and estimated time remaining to complete the trial  
• Using the existing Memorandum of Understanding between the FDA and CMS to enable information sharing with state Medicaid officials 
• Allowing Medicaid to have input about recommendations for confirmatory trial endpoints and targets for the demographic composition of trial participants to enhance drug safety and applicability to Medicaid’s vulnerable populations  
• Implementing policy incentives and requirements that enable the FDA to achieve more manufacturer accountability to publicly disclose updated study statuses and results on ClinicalTrials.gov or in peer-reviewed journals  
• Allowing latitude for Medicaid to craft coverage policies that reflect evidence from clinical trials and peer-reviewed literature, including limiting coverage to studied trial populations and permitting dosage changes 

The FDA accelerated approval pathway and Medicaid interact in a profound way. FDA accelerated approval results in shorter study durations and lower development costs, which can benefit both manufacturers and patients – but only if the drugs are safe and effective. Meanwhile, state Medicaid programs face a requirement to cover all FDA accelerated approval drugs despite lower standards of evidence of effectiveness, which can potentially expose Medicaid members to ineffective or unsafe drugs. There are opportunities to refine policy that enable the promise of accelerated approval while taking needed and appropriate steps to better protect people made vulnerable by serious and life-threatening disease. 

The Medicaid Evidence and Review of Cost Initiative (MERCI) research was supported by a grant from Arnold Ventures.