Recently, the United States Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would rescind the “most-favored nation” pricing model for Medicare Part B drugs.
The most-favored nation (MFN) pricing model would have created a mandatory, seven-year payment model for the 50 highest-cost drugs and biologics in Medicare Part B to replace the current reimbursement formula for these drugs. Instead of adding a 6 percent administration fee to the average sale price (ASP) of the drug, the new reimbursement system would have been based on international pricing information from 22 different countries. Providers would have been reimbursed the “most favored nation” price for the drug plus a fixed payment to cover the cost of procuring, storing, handling and administering these therapies – irrespective of whether the new price covered the overhead costs incurred by medical practices to acquire and administer these therapies.
According to estimates released with the MFN rule, if current pricing structures remained, CMS expected reimbursements to be reduced by more than 50 percent once the model was fully implemented. The agency also acknowledged that a significant portion of the projected savings from the model would come from patients losing access to care.
The model was first proposed by CMS in November 2020 and was scheduled to begin on January 1, 2021. However, the implementation was delayed by a ruling from a federal judge in December 2020 and put on hold by the Biden Administration shortly after inauguration.
CMS notes that “Given that the nationwide preliminary injunction precluded implementation of the [most-favored nation] Model on January 1, 2021, as contemplated, that multiple courts found procedural issues with the November 2020 interim final rule, and that stakeholders expressed concern about the model start date, we are proposing to rescind regulations added by the November 2020 interim final rule and remove the associated regulatory text at 42 CFR part 513.”
CMS continued, saying that if the proposal were finalized, it would allow the agency “to take time to further consider the issues identified by commenters and would address the November 2020 interim final rule’s procedural deficiencies by rescinding it.”
The American College of Rheumatology (ACR) applauded the decision, with David Karp, MD, President of ACR, calling it a “huge victory for the millions of rheumatic disease patients who stood to lose access to needed therapies under this model and have that loss counted as part of the ‘savings’ the model was projected to generate.”
Nearly 700 ACR advocates individually shared their concerns with CMS about the MFN model during the agency’s open comment period
“We remain committed to working with CMS and other regulatory agencies on solutions to lower the cost of prescription drugs while ensuring people living with rheumatic diseases are able to continue accessing the care and therapies they need,” Dr. Karp concluded.
Comments on the proposed rule can be submitted through October 12, 2021.