Fast-tracked drugs cost the US billions—and no one really knows if they work

In the healthcare industry—notoriously full of red tape—it’s hard to get anything done quickly. An exception to the rule might be the FDA’s accelerated approval pathway, which the agency created in 1992 to speed up the approval process of drugs for serious diseases with limited treatment options.

The pathway began in response to the AIDS epidemic, and today most of the drugs approved through this pathway are designed to treat different types of cancer. However, these drugs cost the US healthcare system a lot of money, and in many cases, the clinical benefit is minimal or unknown.

‘We really don’t know if they have clinical benefit or not’

The FDA evaluates accelerated approval drugs based on a “surrogate endpoint”—a measure that shows whether the drug is likely to be clinically beneficial for patients—rather than evidence that the drug is actually effective.

After approval, drugmakers are required to go back and do another trial to confirm the drug is beneficial. But the FDA is historically lax at enforcing deadlines for these confirmatory trials, and as a result, the clinical benefit of many accelerated approval drugs is largely unknown.

“Many different studies have suggested that for certain diseases, certain indications, we have drugs that we really don’t know if they have clinical benefit or not,” said Gregg Gonsalves, a professor of epidemiology at Yale School of Public Health who has expertise in health policy.

A 2022 study published in JAMA found that “many drugs granted FDA accelerated approval lack evidence of clinical benefit, even after being converted to standard approval, yet they account for substantial CMS [Centers for Medicare and Medicaid Services] spending.”

CMS spends billions on accelerated approval drugs

CMS spent a total of almost $68 billion on 38 drugs granted accelerated approval between 2012 and 2017, the JAMA study found.

Once the accelerated approval drugs hit the market, drugmakers also tend to raise prices more frequently than they do for other drugs.

Over a 10-year period, accelerated approval drugs received an average of 15.4 price increases while non-accelerated approval drugs received an average of 12.7 price increases, according to data GoodRx compiled for NPR.

“These drugs tend to be newer, more unique drugs than others, which means they have more bargaining power because they don’t have a lot of competition. So that’s one reason why their prices may go up faster,” said Richard Frank, a senior fellow in economic studies at the research group Brookings.

Gonsalves said it’s hard for him to understand why this is the case, but he speculated that one reason could be because the accelerated approval drugs are made for a small number of patients, so drugmakers hike up prices to make a profit.

He also speculated that drugmakers may “want to milk [a drug] for all it’s worth at the start because as new data comes in, if the clinical benefit isn’t proven, the drug becomes less of an attractive medicine for physicians to use and patients to ask for.”

User fees incentivize accelerated approvals

Accelerated approval drugs may have minimal clinical benefit and certainly cost the US healthcare system a lot of money, but user fees incentivize the FDA to continue accepting drugs through this pathway.

Congress passed the Prescription Drug User Fee Act (PDUFA) in 1992, which requires drugmakers to pay a fee when they submit an application for a new drug to the FDA.

“Back then, it took the FDA many years to review a new drug application,” said Joseph Ross, a professor of medicine and public health at Yale School of Medicine. “[The FDA] argued that they didn’t get sufficient appropriations from Congress to hire all the staff that was needed to review all these applications.”

The user fees were intended to cover the costs of hiring more staff to expedite the review of drug applications, Ross said.

Nowadays, those user fees account for nearly half of the FDA’s budget. In 2022, user fees accounted for $2.9 billion of the FDA’s $6.5 billion annual budget.

The PDUFA gets renewed every five years, and the pharma industry negotiates the user fee amount with the FDA. President Joe Biden approved the most recent version in September 2022, and today, drug companies pay roughly $3 million in user fees per drug application, said Ross.

With user fees, “the incentive there is to get drugs out faster and more drugs out more quickly,” said Gonsalves.