When the US Food and Drug Administration (FDA) approves a drug or medical device on the basis of limited clinical evidence, the Centers for Medicare & Medicaid Services (CMS) must decide whether the therapy is “reasonable and necessary” for coverage among Medicare beneficiaries. However, the legal underpinnings of CMS’s authority to shape coverage of FDA-regulated products under Medicare Part B are controversial. To clarify this area, we reviewed relevant legal precedents on CMS’s approaches to limit coverage and recent decisions Medicare has issued affecting coverage for FDA-regulated products.
The CMS continues to exercise considerable legal discretion to limit coverage of FDA-authorized products to only uses it determines are reasonable and necessary for patients with Medicare. Courts have upheld this discretion repeatedly, emphasizing the difference between Medicare’s coverage criteria and the FDA’s review standards. As more new drugs and devices come to market without solid evidence of efficacy on clinical outcomes, or have narrow benefit-risk considerations, CMS may increasingly rely on forms of limited or conditional coverage, including coverage with evidence development (CED), which provides reimbursement only in the context of a clinical trial or registry.
Conclusions and Relevance
The ability of CMS to condition or limit coverage of FDA-approved products is a commonsense necessity for this crucial taxpayer-funded program. Although courts have thus far deferred to the authority of CMS to make such decisions on the basis of its clear statutory discretion and public health expertise, Congress may want to act to reaffirm statutory language giving CMS sufficient flexibility to craft coverage determinations that reflect the evidence for a product’s use.
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CME Disclosure Statement: Unless noted, all individuals in control of content reported no relevant financial relationships. If applicable, all relevant financial relationships have been mitigated.
Accepted for Publication: June 22, 2023.
Published Online: July 28, 2023. doi:10.1001/jamainternmed.2023.3961
Corresponding Author: Aaron S. Kesselheim, MD, JD, MPH, Brigham and Women’s Hospital, 1620 Tremont St, Ste 3030, Boston, MA 02120 (email@example.com).
Author Contributions: Mr Daval had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.
Concept and design: All authors.
Acquisition, analysis, or interpretation of data: All authors.
Drafting of the manuscript: Daval.
Critical review of the manuscript for important intellectual content: All authors.
Obtained funding: Kesselheim.
Conflict of Interest Disclosures: None reported.
Funding/Support: The study was funded by Arnold Ventures.
Role of the Funder/Sponsor: Arnold Ventures had no role in the preparation, review, or approval of the manuscript or the decision to submit the manuscript for publication.
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It is the CME activity provider's responsibility to submit participant completion information to ACCME for the purpose of granting MOC credit.
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