Most Favored Nation Rule Poses Patient Access Issues, Faces Legal Challenges

November 24, 2020

As reported in last week’s BioUtah News and Events, HHS on Nov. 20 released an interim final rule (IFR) implementing the Most Favored Nation (MFN) Model, a new payment model through the Center for Medicare and Medicaid Innovation (CMMI) that would, starting January 1, base the price Medicare pays for for 50 high-cost Medicare Part B drugs on the lowest price paid in some other developed nations. 

A few types of safety-net and cancer hospitals are exempted. The demonstration would last seven years, and feature a four-year phase-in of the price changes. Reimbursements to providers for MFN drugs would begin as a blend of the current average sales price (ASP) methodology and the MFN price. Reimbursement for the first year would be 25 percent MFN price and 75 percent ASP. The share of MFN price will increase 25 percent per year, with years 4-7 being 100 percent the MFN price.

Policy and Medicine succinctly highlights key features of the rule. 

While the policy, which has been pushed by President Trump for years, has faced opposition from his own party, the model is similar to an international price index included in a bill passed by House Democrats last year.

BioUtah’s national partners, BIO and PhRMA, have released press statements critical of the plan and legal challenges from industry are expected soon. BioUtah opposes the IFR. “BioUtah will continue to voice  opposition to this flawed policy that could limit patient access to critical treatments and potentially deter investment in early-stage drug discovery,” said Kelvyn Cullimore, president and CEO of BioUtah.

 Patients groups are also lining up against the proposal. In its statement on the IFR, the Part B Access Coalition, said, “CMS plans to use reference pricing from countries with health care models where government bureaucrats, not physicians, make medical decisions. There is evidence that patients in these countries do not have access to state-of-the-art medical innovation and is not a model the U.S. should emulate on any level.”

The IFR could face legal challenges based on the use of an IFR without routine notice and comment. Under the Administrative Procedure Act, an agency can expedite rules under a “good cause” exception. The administration has asserted that “there is good cause to waive the notice and comment requirements … because of the particularly acute need for affordable Medicare Part B drugs now, in the midst of the COVID-19 pandemic.” Some stakeholders believe that this justification is weak and may make the rule subject to action in the courts based on process.