CMS Proposes to Rescind ‘Most Favored Nation’ Drug Pricing Rule

WASHINGTON — The Biden administration is planning to rescind a “Most Favored Nation” rule from the Trump administration that would have tested a model requiring that Medicare pay no more for certain drugs than the price paid by some other developed nations.

“Given that the nationwide preliminary injunction precluded implementation of the MFN [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,” CMS said in a proposed rule published late last week. “We believe this proposed rule communicates how we wish to proceed with the November 2020 interim final rule to the courts and the public.”

The Most Favored Nation rule came into being last year. On Sept. 13, 2020, then-President Trump signed an executive order saying that HHS would test payment models for Medicare Parts B and D in which Medicare would pay for certain drugs not more than the “most favored nation” price, defined as “the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organisation for Economic Co-operation and Development that has a comparable per-capita gross domestic product.”

CMS then issued an interim final rule on November 20 to implement the order, but provided very little time for interested parties to comment on the rule, in apparent violation of requirements in the federal Administrative Procedures Act (APA). The rule was contested in the courts, where it was temporarily barred from taking effect, and it left many physician groups unhappy.

Nadeem Baig, MD, a gastroenterologist in Oakhurst, New Jersey, and a member of the board of directors of the Digestive Health Physicians Association, said at the time that the association was “distressed, to say the least, with the rushed process of this … interim final rule proposed last month, given the nature and lack of really appropriate input of stakeholders in this process, and skipping of many steps in the process of rule-making at the administrative level. We fear our patients would suffer.”

He noted that “by the government’s own estimates, one in five patients who get these life-altering drugs … would have lost that access,” according to a chart on page 184 of the interim final rule. “A key driver of their savings was the people who were not getting the drugs,” Baig said.

Patients who couldn’t get the drugs from an office-based gastroenterologist might have to scramble to find an alternate site, and “some patients would be driven to hospitals — which are full of COVID — to get these drugs, and usually hospitals charge a higher price to infuse these drugs,” he added.

In Friday’s proposed rule, the agency said that the rule “is limited to the codification of the November 2020 interim final rule, and does not reflect any judgment by HHS regarding future policy.” CMS reminded readers that “on July 9, 2021, President Biden signed the Executive Order on Promoting Competition in the American Economy that, in part, directs the Secretary of HHS to take steps to lower the prices of and improve access to prescription drugs and biologicals.”

“HHS is exploring opportunities to promote value-based care for our beneficiaries; to address the high cost of Medicare Part B drugs, manufacturers’ pricing, and the resulting growth in Medicare Part B drug spending; and to modernize the Medicare program to improve the quality and cost of care for beneficiaries,” CMS continued. “We will continue to carefully consider the comments we received on the November 2020 interim final rule as we explore all options to incorporate value into payments for Medicare Part B drugs and improve beneficiaries’ access to evidence-based care.”

At least one physician group was happy to hear of the CMS proposal. “The Association for Clinical Oncology (ASCO) commends the Biden administration for proposing to rescind the Most Favored Nation (MFN) model from consideration,” said board chair Howard “Skip” Burris III, MD, in a statement. “ASCO has consistently opposed the ill-advised MFN model, as it would have had a devastating impact on people with cancer.”

“The proposed MFN model would have imposed a nationwide, mandatory experiment that would cut reimbursement for 50 drugs, including 38 drugs used to treat cancer,” said Burris. “According to estimates from CMS, the MFN model would have caused 19% of Medicare beneficiaries to lose access to drugs included in the model. ASCO’s analysis conducted in 2020 found that reimbursement cuts to just four drugs commonly used to treat lung and other cancers would have resulted in patients with lung cancer losing as many as 87,556 years of life due to their loss of access to these drugs over the model’s 7-year duration.”