CMS pulls Trump-era Most Favored Nation drug price model

The Biden administration has officially pulled a controversial model that would have tied prices for drugs reimbursed under Part B to prices paid by countries overseas.

The Centers for Medicare & Medicaid Services (CMS) issued a final rule last week that pulls the demonstration approved at the tail end of the Trump administration. Providers had slammed the Most Favored Nation model due to concerns over reimbursement.

CMS said in the final rule published on Dec. 29 that the model sparked four lawsuits from the drug industry, which resulted in a legal stay delaying it from going into effect.

In light of the legal rulings, CMS decided back in August to propose pulling the model in its entirety.

The model would have identified 50 Part B single-source drugs and biologics and tied the reimbursement price to an average paid by several countries overseas.

While CMS’ final decision is a major win for the pharmaceutical industry, provider groups are also sure to be happy. Several groups said in comments to CMS that the rule would hurt reimbursement for providers as they still fight the COVID-19 pandemic.

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Medicare reimburses drugs under Part B, which are administered in a doctor’s office, at the average sales price and includes an add-on payment at 4% of that price to cover handling and storage costs for the provider.

But the model would have changed the add-on to be a flat fee no matter the cost of the product. CMS has long had concerns that the add-on entices providers to prescribe only higher-cost drugs to get a larger reimbursement.

However, some providers have told Fierce Healthcare they were worried the model would have made it impossible to stock up on certain drugs since prices would fluctuate from quarter to quarter. Providers such as oncology practices were worried they could buy the drug at one price but then be reimbursed at a lower price when it is administered later on.

Some that commented on the proposed rule back in August were also concerned that manufacturers would not pay the discounted amount and patients could lose access to the products, according to the final rule.

This is the latest move by the Biden administration to roll back some of the moves made by the president’s predecessor. On Dec. 23, CMS announced Georgia cannot install work requirements, a similar rebuke to Trump-era policy.