High cost of newly approved drugs hitting employers and patients
March 3, 2025
Summary: Newly marketed drugs are very expensive, and current labeling of drugs receiving accelerated approvals doesn’t inform patients that studies have not yet been completed to demonstrate safety and effectiveness.
Source: Ubel, et al New Engl J of Medicine February 15, 2025
The Food and Drug Administration (FDA) has an accelerated program to give rapid approval for drugs that appear promising in treating otherwise untreatable diseases. Drug companies are required to continue to study the medications in Phase 4 trials to confirm clinical benefit, but it can take over 10 years to withdraw the FDA approval if studies do not confirm benefits. In 2024, 14% of new drugs went through the FDA’s accelerated approval pathway.
Accelerated approval is important to patients with these diseases; they often won’t survive years of waiting, and they want and need access to innovative drugs quickly. On the other hand, once a drug is approved many patients will no longer receive the drug for free (either in a clinical trial or through a compassionate use request). There are not large incentives for pharmaceutical companies to rush to finish trials, because if the trials fail to confirm the drug’s efficacy or safety, the drug company will have to withdraw the drug.
That’s what happened with Relyvrio (sodium phenylbutyrate-taurursodiol), which received accelerated FDA approval to treat amyotrophic lateral sclerosis (ALS - Lou Gehrig’s Disease) in 2022 based on positive results from a very small clinical trial. The drug was priced at $150,000 annually. The drug was withdrawn from the market last year when it did not appear to be statistically significantly better than a placebo.
As researchers in the New England Journal reported last week, the FDA is not currently allowed to consider finances when it determines whether to approve a drug either through the traditional or the expedited drug approval process. They point out that the financial toxicity of drugs can lead to non-adherence to therapy, and to financial insecurity for patients and their families. They suggest a review board to recommend pricing on drugs that are approved rapidly, as well as drug labeling to remind patients that more definitive research on the drug’s effectiveness is not yet available. They also suggest policies to limit out of pocket expenses for patients taking drugs that have been approved through an accelerated process.
Implications for employers:
Newly marketed drugs can make the difference between life and death for patients. However, high out of pocket costs can upend patients’ and families’ finances.
Employers should evaluate their plan design to be sure that their members are able to gain access to expensive drugs when there are no well-established effective alternatives.
Prior authorization can confirm accelerated approval drugs are used appropriately.
The continuing escalation of drug prices threatens the affordability of health care for both employers and their plan members.
Tomorrow: More evidence that spinal steroid injections often don’t help back pain