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August 10, 2021

CMS backpedals on the contentious Most Favored Nation rule—for now

Daily Briefing

    CMS in a proposed rule last week said it planned to rescind the Trump administration's "most favored nation" (MFN) rule, which aimed to lower prescription drug costs by aligning certain Medicare Part B drug prices with lower prices paid in other countries.

    CMS said it would accept public comments on the proposal through October 9.

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    In November 2020, the Trump administration finalized an interim rule directing CMS' Center for Medicare and Medicaid Innovation (CMMI) to implement and test a mandatory, seven-year MFN Model. The model, which would have been phased in over four years, would have been mandatory for physician practices and hospital outpatient departments nationwide.

    Under the model—which would have applied to 50 drugs and biologics responsible for "a high percentage" of Medicare Part B spending—Medicare would have no longer based payments to providers for the affected drugs on the average sales price (ASP) of those drugs in the U.S. commercial market. Instead, CMMI would have implemented a flat payment for those Medicare Part B drugs, using a formula that links payments for the drugs to lower prices paid for the drugs in certain other countries.

    The interim final rule drew criticism from both providers and the drug industry. Pharmaceutical Research and Manufacturers of America (PhRMA) president and CEO Stephen Ubl vocally criticized the rule, claiming the organization was considering "all options to stop this unlawful onslaught." The American Hospital Association (AHA) and other organizations also formally requested CMS withdraw the rule earlier this year.

    Ultimately, a federal judge issued an injunction blocking the rule from taking effect at the beginning of 2021. The rule has been on hold since that time, Modern Healthcare reports.

    Proposed rescission

    In the new proposed rule, CMS noted that many of the 1,166 comments submitted on the MFN interim final rule expressed concern over the model's intended start date. In response to these comments, the injunction, and other courts' findings regarding procedural issues with the MFN rule, the agency proposed to rescind the interim final rule and associated regulatory text. 

    "If finalized, our proposal would allow us 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 rule states.

    However, the agency said it may consider an MFN-like rule in the future and emphasized its commitment to lower the prices of and increase access to prescription drugs and biologics.

    "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," the agency said.

    Provider groups voiced relief over the proposed recission, Modern Healthcare reports.

    The Medical Group Management Association said, "When this model was first announced last year, we were perplexed to see that the onus was on medical group practices rather than drug companies to ultimately solve the issue of high drug prices in this country. If this model went into effect, it would have threatened access to care for some of the country's most vulnerable patients." (Brady, Modern Healthcare, 8/6)

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