Medicare covers the majority of FDA-approved devices and Part B drugs, but restrictions and discrepancies remain.

The Food and Drug Administration (FDA) and Medicare use different standards to determine, first, whether a new drug or medical device can be marketed to the public and, second, if the federal health insurance program will pay for use of the drug or device. This discrepancy creates hurdles and uncertainty for drug and device manufacturers. We analyzed discrepancies between FDA approval and Medicare national coverage determinations for sixty-nine devices and Part B drugs approved during 1999-2011. We found that Medicare covered FDA-approved drugs or devices 80 percent of the time. However, Medicare often added conditions beyond FDA approval, particularly for devices and most often restricting coverage to patients with the most severe disease. In some instances, Medicare was less restrictive than the FDA. Our findings highlight the importance for drug and device makers of anticipating Medicare's needs when conducting clinical studies to support their products. Our findings also provide important insights for the FDA's and Medicare's pilot parallel review program.