Two recent updates are problematic for the Trump administration’s Most Favored Nations rule (MFN). An analysis by Avalere shows the rule is not likely to result in major savings for beneficiaries. Additionally, organizations are starting to speak out against the rule, and as we previously reported, trade organizations BIO and PhRMA are pursuing litigation that could ultimately block the rule.
No Savings
The controversial final rule to tie the prices Medicare reimburses for certain drugs to the prices paid overseas likely will not result in major savings for beneficiaries, a new report found. The analysis by consulting firm Avalere Health indicates that the vast majority of Medicare fee-for-service beneficiaries will not see any reduction to their out-of-pocket costs from the rule because they already get supplemental coverage.
The firm estimated that “less than 1% of beneficiaries in Medicare would see reduced [out-of-pocket] costs (in a given year) if the demo were to include the 50 drugs,” according to the analysis.
Avalere looked at Medicare enrollment in 2017 and claims data to identify which beneficiaries received one of the 50 drugs. The firm noted that the findings are like another analysis it performed in 2018 when the model was first proposed in an advanced notice of proposed rulemaking. HHS never issued a proposed rule on the model and bypassed the proposal period to install an interim final rule late last month.
The 2018 analysis, which focused on only 27 drugs, also found that 87% of Part B beneficiaries won’t be impacted by the model because of supplemental coverage. It also found that less than 1% of seniors in Medicare would see their out-of-pocket costs decline.
With this information in mind, it is not surprising to see mounting opposition to the MFN rule. The American College of Rheumatology (ACR) is one such organization.
“While the ACR supports efforts to rein in high drug costs, we strongly believe this policy will come at great expense to the patients we serve,” said David Karp, MD, PhD, president of the ACR. “As currently written, the MFN interim final rule makes dramatic cuts to specialty providers like rheumatologists who administer Part B drugs in hopes that manufacturers will be motivated to lower drug prices on their own. However, we have not seen this occur with similar efforts in the past, and drug prices have continued to rise for patients. We are concerned this model will severely restrict patient access to treatment while doing little to address the root causes of high prescription drug prices.”
“The new fixed payment rate will likely not be enough to cover the cost of acquiring and administering many of the therapies most frequently administered by rheumatologists, which will require practices to either operate at a loss or forgo offering the treatment altogether,” said Dr. Karp. “This will be detrimental to provider solvency and patient access to medications.”
“At a time when many healthcare providers have already been stretched thin due to the COVID-19 pandemic, it is dangerous for CMS to rush through a payment model that further compromises providers’ ability to offer quality rheumatology care,” Dr. Karp continued. “The ACR looks forward to working collaboratively with CMS officials to implement drug pricing reforms that do not put rheumatic disease patients and the providers they depend on for care in jeopardy.”
Lawsuits Filed
The Biotechnology Innovation Organization recently filed its lawsuit to block implementation of MFN. BIO, which primarily represents small biotech companies, has complained that the policy would “eliminate hope for vulnerable seniors.” BIO is filing the lawsuit in California alongside two California biotech organizations: the California Life Sciences Association and Biocom.
BIO’s lawsuit primarily challenges the unusual process the Trump administration is using to enact the proposal in record time. Trump is using a rare regulatory maneuver, known as an interim final rule, that allows government agencies to skip over most of the steps in the regulatory process. Governments can only use the maneuver when it would be “impracticable, unnecessary, or contrary to the public interest” to follow the normal, slower procedure.
BIO argues in its lawsuit, which is set to be filed in the Northern District of California, that the government failed to meet that standard. The Trump administration cites the “particularly acute need” for cheaper drugs “in the midst of the Covid-19 pandemic” as its rationale for moving so fast. BIO is asking the court to temporarily block the proposal from being implemented next month, while the court reviews their overall legal argument. Ultimately, BIO is asking a judge to throw out the policy in its entirety.
As we previously reported, the Pharmaceutical Research and Manufacturers of America (PhRMA) also filed suit in a separate court. Their lawsuit claims the rule change is illegal because it relies on laws allowing the administration to test new drug pricing models but is too far-reaching to qualify as a pilot. It requests that the court halt the rule before it can be implemented. PhRMA is joined in its suit by the Association of Community Cancer Centers, a network of cancer treatment providers.