Bridging the Gap: The Long Road from FDA Approval to Medicare Coverage

A new study published in JAMA Health Forum reveals that the road to Medicare coverage for novel medical technologies is a long and winding one. Researchers found that only 44% of innovative devices and diagnostics approved by the FDA from 2016-2019 had even “nominal” Medicare coverage by 2022. This data highlights major hurdles in the system that delay patient access to beneficial emerging technologies.

About the Research

The study examined 281 novel products cleared through the FDA from 2016-2019 via the high-risk premarket approval, de novo, and breakthrough 510(k) pathways. These included things like groundbreaking diagnostic tests, implantable devices, and other innovative treatment technologies.

The goal was to measure how long it took to establish national or regional Medicare coverage policies for these newly approved products. This is important because Medicare coverage is required before hospitals, physicians and patients can reliably access new technologies.

Key Findings

• The authors defined coverage as: the establishment of a National Coverage Determination or a Local Coverage Determination or the assignment of a specific HCPCS code.
  
  
• Out of 281 FDA approved products, only 64 were truly novel with no Medicare coverage pathway pre-established.
• Just 28 of those 64 technologies (44%) achieved any Medicare coverage by the end of the 3-7 year follow-up period.
• The median time to first Medicare coverage was 5.7 years after the product was FDA approved.
• Smaller companies with less than 200 employees were far less likely to achieve Medicare coverage than large manufacturers.
• Diagnostic lab tests reached coverage faster than medical devices and treatments.
• The level of clinical evidence supporting FDA approval had no association with achieving Medicare coverage.

Why Do These Delays Matter?

Federal law requires Medicare to cover services that are “reasonable and necessary” for beneficiaries. But the results show Medicare coverage lags years behind FDA safety and efficacy approvals, even when products are supported by gold standard clinical data.

This means many older Americans and disabled Medicare enrollees are frequently denied access to the latest medical advancements for years after they’ve been rigorously validated and made commercially available. Doctors’ hands are also tied in offering innovative care options if Medicare reimbursement isn’t available.

Delays are even more pronounced for small businesses developing novel technologies, putting them at a major disadvantage. This impacts innovation ecosystems by discouraging funding for transformative early-stage medical startups.

Closing the Medicare Coverage Gap

Recognizing these issues, the FDA, CMS and legislators have proposed reforms like the Transitional Coverage for Emerging Technologies pathway. These seek to accelerate coverage for breakthrough products, while gathering additional post-approval data in the Medicare population. Such evidence-based transitional coverage programs can help balance timely access with responsible value assessment.

There are also calls for enhanced transparency and consistency in Medicare’s coverage criteria. Right now, the “reasonable and necessary” standard for coverage is vague, hampering developers. Clearer guidance on required evidence thresholds would aid manufacturers in designing appropriate clinical studies.

The authors suggest that requiring Medicare coverage bodies like MACs to formally consider FDA determinations of safety and effectiveness could streamline approvals. Currently less than half of Medicare coverage policies align with FDA-cleared uses. However, they fail to fully acknowledge that Medicare's decision of "reasonable and necessary" is inherently different than the FDA's decision of "safe and effective." In some cases this makes sense. A technology that is less effective in an older Medicare population with additional comorbidities may not be a "reasonable and necessary" treatment even if it is "safe and effective."

Implications for Medical Technology Innovators

For manufacturers of cutting-edge medical technologies, the long runways to Medicare coverage have major implications:

• Seek larger investments to sustain lengthy R&D timelines. Coverage delays extend the runway to profitability.
• Front-load development of clinical evidence packages to meet both FDA and payer requirements.
• Pursue supplemental FDA programs like Breakthrough Device Designation that can enable enhanced interactions with CMS.
• Leverage real-world evidence gathering to address evidentiary gaps for the Medicare population.
• Factor reimbursement timelines into launch planning and be prepared to offer financial assistance programs for patients.
• Build internal and external reimbursement expertise early, including staff with payer policy experience.

The challenges are steep but solutions are emerging to enable timely coverage of innovation. Payers, regulators and manufacturers will need to work hand-in-hand to bridge today's access gaps and truly deliver transformative new technologies to the patients who need them.