CMS officially tosses ‘Most-Favored Nation’ drug pay model


The Centers for Medicare and Medicaid Services officially tossed out a Trump-era policy that would have prevented Medicare from paying more for certain outpatient drugs than the lowest price paid by other wealthy countries, according to a final rule released last week.

All but one of the 34 commenters on the proposed rule supported rescinding the policy, according to CMS.

“We will continue to carefully consider this commenter’s feedback and other stakeholders’ feedback that we received as we explore all options to incorporate value into payments for Medicare Part B drugs, improve beneficiaries’ access to evidence-based care, and reduce drug spending for consumers and throughout the healthcare system,” the final rule said.

The Trump administration put out an interim final rule last November that would have implemented a policy known as the Most-Favored Nation model nationwide for seven years, beginning Jan 1, 2021. A federal court blocked the policy from taking effect last December, and it’s been on hold since the Biden administration entered office shortly after. CMS proposed getting rid of the rule in August, citing legal issues with the Trump-era model. The December 29 final rule is effective February 28.

Hospitals, providers and pharmaceutical companies alike panned the demonstration, saying it would harm patients’ access to drugs and hamper their own financial prospects. While the model was pitched as a way to lower drug prices, it didn’t specify whether drugmakers would have to decrease prices for healthcare providers, meaning providers could have had to offer drugs at a financial loss.

Providers also disagreed with the Trump administration’s push to make the model mandatory across the country. Most demonstrations from the Center for Medicare and Medicaid Innovation are voluntary, only run for a few years and include only a handful of participants.

CMS’ decision to do away with the model came as a relief to healthcare industry players.

“The revised reimbursement methodology for certain Part B drugs would have penalized medical practices and some of the most vulnerable beneficiaries they treat. We support finding workable solutions for lowering drug costs and spending, but not at the expense of the nation’s physician practices and their patients,” Medical Group Management Association Director of Government Affairs Claire Ernst said in a statement after the rule was rescinded.

Indeed, the Biden administration has floated other ideas for reigning in prescription drug costs. President Joe Biden’s executive order on increasing competition directed the Food and Drug Administration to work with states to import medicine from Canada and encouraged regulators to stop drug companies from avoiding competition from generics manufacturers.

Biden also required HHS to publish a report on lowering drug prices. The report, released in September, recommended giving incentives to providers for administering biosimilars and said it may consider small-scale mandatory models to link prescription drug and biosimilars to improved patient outcomes and other factors. But HHS didn’t delve into details or next steps, mostly deferring to Congress.

The agency could even move forward with a new model that’s substantially similar to the Most-Favored Nation policy. The Biden administration’s problem with the policy seemed primarily due to legal considerations, Washington University in St. Louis law professor Rachel Sachs wrote in an email.



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