Medicaid's Proposed “Line Extension” Redefinition Imperils Innovation and Patient Access

By Xcenda |

In June, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would, among other changes, introduce a vastly expanded redefinition of “new formulation” to include any change to a drug, provided that the new formulation contains at least 1 active ingredient in common with the initial brand-name listed drug.
 
CMS proposes to treat as line extensions “any new formulation that contains at least 1 active ingredient in common with [a previously approved drug]” including “a drug that is a combination of 2 or more drugs” and “changes in indication accompanied by marketing as a separately identifiable drug (for example, a different NDC [National Drug Code]).” That interpretation would cause many new products to be categorized as “line extensions” and tie their Medicaid rebate obligations to the inflation penalties of their predecessor products. As a result, the proposal has the potential to increase manufacturer Medicaid rebate liability and 340B exposure.
 
Combination therapies are important to the successful treatment of infectious diseases, cancer, mental health, and many rare disorders; the Food and Drug Administration (FDA) has long encouraged manufacturers to submit for approval fixed-dose combination (FDC) products. This broad interpretation could dampen the life-changing innovation and may also create a new financial incentive for manufacturers to bring any new molecule to market separately. Ultimately, regulations that discourage their development could result in worse outcomes for patients.
 
To determine the breadth of combination products being studied in clinical trials that might be considered line extensions under the Medicaid proposal, Xcenda conducted an analysis and found that 17 clinical trials include FDC combination therapies that CMS might newly classify as line extensions under the proposed rule. This included trials that are exploring combination therapies to treat some of the most persistent and troublesome indications facing us today:
  • Amyotrophic lateral sclerosis
  • Bipolar depression and suicidal ideation
  • Cystic fibrosis
  • HIV infection
  • Opioid abuse and dependence
  • Parkinson’s disease
  • Pulmonary arterial hypertension

Given the wide-sweeping proposed line extension definition, these make up only a small subset of the drugs currently being studied that could be affected. Line extension drugs are subject to increased Medicaid rebate obligations, potentially leading manufacturers to reprioritize their development efforts. This would be an unfortunate unintended consequence of this expansion of the line extension definition, despite the profuse evidence that combination products are well outside Congress’ intent to only include drugs with “slight alterations.”

Should CMS finalize its proposals for line extensions and new formulations, there is a very real possibility that manufacturers will change their development plans for future combination therapies, potentially bringing medicines to market as separate products or canceling development plans altogether. The disincentives inculcated by its proposals threaten patient health and outcomes, which should concern CMS, especially in these times.
 
Please click below for a formatted version of this story and a table listing the 17 clinical trials studying FDC combination therapies that CMS might newly classify as line extensions under the proposed rule.
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Medicaid’s Proposed “Line Extension” Redefinition Imperils Innovation and Patient Access

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