One of the most important health care protections for low-income Americans is the requirement that state Medicaid programs cover nearly all medications approved by the U.S. Food and Drug Administration. This directive prevents states from balancing their books on the backs of the poor by excluding expensive drugs from Medicaid.
Last month, Oregon decided it didn’t want to be subject to that rule anymore. The state is seeking a federal waiver that would allow it to decline Medicaid coverage for some FDA-approved drugs.
In other words, it wants to open the door to government rationing of care. And it’s hoping to make the poor its first victims.
Oregon’s proposal could deny coverage for treatments in a few ways. Each would channel patients away from the newest treatments, regardless of whether one is best for a given patient.
First is a one-size-fits-all “closed formulary,” wherein the state covers a single medication in each therapeutic class — one antidepressant for all people with depression, for example.
It’s a safe bet that a newer, more expensive medication will not displace an older, cheaper treatment — no matter how much the former improves patient outcomes.
Second is a new state review process that would second-guess the FDA’s approval decisions. State officials say that they’re on the lookout for drugs they claim have “limited or inadequate evidence of clinical efficacy.”
They’re targeting medications on the FDA’s “accelerated use” pathway — an internal clearance procedure designed to get potential breakthrough treatments to patients sooner — in particular. Such treatments tend to be expensive. Oregon would rather not pay for them.
Oregon’s proposal rests in part on the pretense that drugs fast-tracked by the FDA are inherently less effective and therefore not worth the cost. Research suggests otherwise. A 2017 Health Affairs article found that medicines given expedited approval by the FDA are actually more effective on average than those approved conventionally.
Almost all of today’s most effective treatments for lung cancer, for example, were made possible by this accelerated approval process.
For all the FDA’s faults, the agency doesn’t consider cost when evaluating a drug for approval. Nor should it.
To see why, look to the United Kingdom. Its National Institute for Health and Care Excellence, or NICE, is famous for denying coverage for lifesaving drugs it deems too expensive. For example, in 2017 NICE blocked Kadcyla, an effective treatment for breast cancer, due to its cost.
Some American patients already have experience with government bodies that ration medicine. Half of the most-used drugs covered by Medicare Part B aren’t included in the Veterans Health Administration’s closed formulary. The VA also covers 16% fewer drugs than Medicare Part D, the drug benefit for seniors.
Granting Oregon’s request to potentially exclude life-saving medications from Medicaid would swing the door open to rationing in other states. It would also set a precedent for 50 state review bodies to second-guess the FDA, each of which would be subject to local political pressures.
A “race to the bottom” on treatment could ensue, as doubts raised in one state could serve as a pretext for cost-cutters in other states to deny coverage.
The Biden administration should recognize Oregon’s waiver request for what it is — a proposal to ration and deny care for its poorest residents.
• Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All” (Encounter 2020). Follow her on Twitter @sallypipes.
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