Biden Administration Moves Away From the Most-Favored-Nation Drug Pricing Model

The search for a mechanism to lower Medicare part B drug prices has been a slow and tortuous journey. The latest detour was announced on Friday by the Centers for Medicare and Medicaid Services (CMS).

The most-favored-nations (MFN) proposal, which had gained momentum through December 2020, spurred on by the Trump administration, seems to have reached a dead end. It was the subject of a final interim rule released in November, with a lightning-quick initial start date of January 1, 2021; however, the incoming Biden administration paused the implementation for a period of review. This was expected; it was part of the lame duck push to rush out regulations before a new president took the reins. During the 60 days following publication, the rule elicited more than 1,100 comments.

Several lawsuits were filed by industry associations and pharmaceutical companies themselves in an effort to delay the implementation of the MFN final rule. The latest stay of implementation expired today, and the Department of Health and Human Services appears ready to throw in the towel. The proposed rule was published on-line in the Federal Register, saying “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.”

This does not mean necessarily that it is dropping the fight against high pharmaceutical prices—just that the MFN model as constructed is not the way it will proceed.

As we reported in December, the MFN interim final rule affected several existing biosimilars, in addition to those likely to be subject to FDA decisions in the near future (ranibizumab and aflibercept). Under this rule, payments for Medicare part B drugs would have been limited to a reference based on that paid other countries. However, because of its phased-in approach, its affect on biosimilars would have been limited (at first).

This leaves us wondering in what tools CMS will use, if any, to regulate pharmaceutical pricing. This was an issue that the Democrats, in particular, are interested in addressing. Long ago, they began building an avenue towards Medicare negotiating drug prices on behalf of seniors. I doubt they are willing to abandon it this far down the line.

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