Coverage of Novel Therapeutic Agents by Medicare Prescription Drug Plans Following FDA Approval

J Manag Care Spec Pharm. 2018 Dec;24(12):1230-1238. doi: 10.18553/jmcp.2018.24.12.1230.


Background: Regulatory approval of novel therapies by the FDA does not guarantee insurance coverage requisite for most clinical use. In the United States, the largest health insurance payer is the Centers for Medicare & Medicaid Services (CMS), which provides Part D prescription drug benefits to over 43 million Americans. While the FDA and CMS have implemented policies to improve the availability of novel therapies to patients, the time required to secure Medicare prescription drug benefit coverage-and accompanying restrictions-has not been previously described.

Objective: To characterize Medicare prescription drug plan coverage of novel therapeutic agents approved by the FDA between 2006 and 2012.

Methods: This is a cross-sectional study of drug coverage using Medicare Part D prescription drug benefit plan data from 2007 to 2015. Drug coverage was defined as inclusion of a drug on a plan formulary, evaluated at 1 and 3 years after FDA approval. For covered drugs, coverage was categorized as unrestrictive or restrictive, which was defined as requiring step therapy or prior authorization. Median coverage was estimated at 1 and 3 years after FDA approval, overall, and compared with a number of drug characteristics, including year of approval, CMS-protected class status, biologics versus small molecules, therapeutic area, orphan drug status, FDA priority review, and FDA-accelerated approval.

Results: Among 144 novel therapeutic agents approved by the FDA between 2006 and 2012, 14% (20 of 144) were biologics; 40% (57 of 144) were included in a CMS-protected class; 31% (45 of 144) were approved under an orphan drug designation; 42% (60 of 144) received priority review; and 11% (16 of 144) received accelerated approval. The proportion of novel therapeutics covered by at least 1 Medicare prescription drug plan was 90% (129 of 144) and 97% (140 of 144) at 1 year and 3 years after approval, respectively. At 3 years after approval, 28% (40 of 144) of novel therapeutics were covered by all plans. Novel therapeutic agents were covered by a median of 61% (interquartile range [IQR] = 39%-90%) of plans at 1 year and 79% (IQR = 57%-100%) at 3 years (P < 0.001). When novel therapeutics were covered, many plans restricted coverage through prior authorization or step therapy requirements. The median proportion of unrestrictive coverage was 29% (IQR = 13%-54%) at 3 years. Several drug characteristics, including therapeutic area, FDA priority review, FDA-accelerated approval, and CMS-protected drug class, were associated with higher rates of coverage, whereas year of approval, drug type, and orphan drug status were not.

Conclusions: Most Medicare prescription drug plans covered the majority of novel therapeutics in the year following FDA approval, although access was often restricted through prior authorization or step therapy and was dependent on plan choice.

Disclosures: Funding for this study was contributed by a student research grant awarded to Shaw and provided by the Yale School of Medicine Office of Student Research under National Institutes of Health training grant award T35DK104689. Ross reports research grants to Yale University from the U.S. Food and Drug Administration (U01FD005938, U01FD004585), Medtronic, Johnson & Johnson, Centers for Medicare & Medicaid Services (HHSM-500-2013-13018I), Blue Cross-Blue Shield Association, Laura and John Arnold Foundation, Agency for Healthcare Research and Quality (R01HS022882), and National Institutes of Health (R01HS025164), unrelated to this study. Dhruva has nothing to disclose. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health.

MeSH terms

  • Centers for Medicare and Medicaid Services, U.S. / economics
  • Centers for Medicare and Medicaid Services, U.S. / legislation & jurisprudence
  • Centers for Medicare and Medicaid Services, U.S. / trends
  • Cross-Sectional Studies
  • Drug Approval / legislation & jurisprudence*
  • Insurance Coverage / economics*
  • Medicare Part D / economics*
  • Medicare Part D / legislation & jurisprudence
  • Medicare Part D / trends
  • Orphan Drug Production / economics
  • Orphan Drug Production / statistics & numerical data
  • Prescription Drugs / economics*
  • Prior Authorization / economics
  • Prior Authorization / statistics & numerical data
  • Time Factors
  • United States
  • United States Food and Drug Administration / legislation & jurisprudence*


  • Prescription Drugs