
Table of Contents
As we enter 2025, thousands of investors and company executives are meeting in San Francisco for the annual J.P. Morgan Healthcare Conference to discuss their pipelines and the potential benefits their products could bring to both patients and investors. One optimistic point of note is the FDA’s increased willingness to use an accelerated approval pathway to approve therapies where there’s high unmet need based on surrogate endpoints.
But every silver lining has a potential cloud. Could Independence Blue Cross (IBX), a Philadelphia-based Blue Cross Blue Shield plan, signal broader shifts in the healthcare landscape with its recent decision to refuse payment for drugs, biologics, or gene therapies in the 18 months following their approval through the FDA's accelerated pathway?
Fortunately, the exclusion only applies to therapies based on a surrogate endpoint where the FDA has indicated a confirmatory trial is needed to confirm the clinical benefit. It also does not apply to drugs with accelerated approval used to treat patients with cancer.
This action reflects growing payer resistance to high-cost therapies that are perceived to lack sufficient evidence of long-term clinical benefit at the time of launch.
Here are some considerations that make this decision significant:
1. Payer Scrutiny and Demands for Real-World Evidence
Accelerated approval allows drugs to come to market based on surrogate endpoints, with the requirement to confirm clinical benefits in post-marketing studies. However, delays in completing these confirmatory trials have drawn criticism from legislators and payers.
Payers may increasingly demand more robust evidence of effectiveness or wait until confirmatory trials are completed before covering high-cost therapies, especially if the surrogate endpoints do not directly translate into meaningful patient outcomes.
2. Budget Pressures and Cost Containment
Rising drug costs, particularly for specialty and oncology drugs often approved via accelerated pathways, are pushing payers to find ways to control spending.
Refusal to cover these drugs initially could set a precedent for other insurers to adopt similar policies, especially for drugs with uncertain long-term value.
3. Impact on Biopharma Innovation
Such policies could discourage biopharma companies from relying on the accelerated approval pathway.
This could incentivize companies to invest more in demonstrating value through rigorous clinical trials before seeking approval, potentially reducing the number of products that enter the market based solely on surrogate markers.
4. Broader Trend Toward Value-Based Healthcare
This decision aligns with the broader industry trend toward value-based care, where payers and providers focus on ensuring treatments deliver meaningful clinical outcomes relative to their cost and more frequently tie payment to therapy performance.
5. Potential for Uneven Access
While payers may view this as a cost-control measure, it risks creating disparities in access. Patients who cannot afford to pay out-of-pocket for these therapies may be left without treatment options during the initial period, even if the drug shows promise.
The View from the Crow’s Nest
The IBX decision to not cover drugs approved under the Accelerated Approval Program raises some important questions:
Payer Alignment: Will other major insurers adopt similar policies, or will IBX remain an outlier?
Regulatory Response: Will the FDA or legislators respond by increasing oversight of the accelerated approval pathway or its post-marketing requirements?
Biopharma Adjustments: Will drug manufacturers need to modify their development strategies to de-risk payer adoption delays, such as prioritizing endpoints with clearer clinical relevance or focusing on health-economic evidence?
This decision by IBX highlights the growing tension between biopharma innovation, regulatory pathways, and payer expectations. It serves as a wake-up call for manufacturers to emphasize value creation and real-world impact earlier in the development process.