A seven-year model proposed by the Center for Medicare & Medicaid Services (CMS) has been temporarily restrained following multiple lawsuits filed by pharmaceutical corporations and physician organizations. The Most Favored Nation (MFN) model, which was scheduled to go live on January 1, 2021, is now stalled.
The CMS Innovation Center announced the mandatory MFN model on November 20, 2020, to test whether reimbursing care providers for Medicare Part B drugs and biologicals (these are drugs administered in a doctor’s office or at an infusion center) at rates that match international prices would reduce the nation’s health care spending. This would also meet the requirements of President Trump’s Executive Order on lowering drug prices for U.S. patients.
The model has the following key payment structure:
- MFN price: Instead of basing reimbursement on the drug manufacturer’s average sales price (ASP), Medicare would calculate reimbursement for a drug by blending the drug’s lowest adjusted international price (MFN price) and the ASP. There is also a single add-on payment per dose that Medicare enrollees are not responsible for.
- Four-year phase-in period: The MFN price will be introduced at 25% per year over the first four years, and will be 100% of the MFN price during years four to seven
- ASP: To control patient cost-sharing, the formula will not allow the model payment amount to exceed the ASP
This nationwide mandatory model requires participation by all providers and suppliers that receive Medicare Part B fee-for-service payments for the 50 drugs currently included in this model, chosen based on annual spending in 2019 and expected to be updated annually.
Several physician organizations have strongly denounced this rule and filed lawsuits that stopped CMS from implementing the MFN model at the beginning of January 2021. This includes a multi-organization lawsuit filed by the Association of Community Cancer Centers (ACCC) in collaboration with the Pharmaceutical Research and Manufacturers of America, the Global Colon Cancer Association, and the National Infusion Center Association, asserting that CMS has exceeded its statutory authority with implementing this model while simultaneously failing to follow appropriate rulemaking procedures.
“This a temporary victory for cancer patients and providers yet we still have a way to go. It is important that any policies enacted don’t limit our ability to serve patients and their families. Poorly designed policies such as MFN can have devastating impacts on patients, particular those in rural and underserved areas who are vulnerable to changes that will limit the care they receive,” said ACCC President Dr. Randall A. Oyer, in a statement.