The Biden administration plans to pull the plug on a contentious Trump-era demonstration that would tie Medicare outpatient drug pay to other wealthy countries’ drug prices, according to a CMS proposed rule on Friday.
Hospitals had opposed the “most favored nation” drug policy, arguing that it would hurt their bottom lines and put the entire onus of lowering drug prices on hospitals rather than drug companies or Medicare. The Trump-era rule also would have created the CMS Innovation Center’s first nationwide, mandatory experiment—a massive departure from the agency’s usual approach to testing new payment models among a smaller subset of healthcare organizations.
Drugmakers and fiscal conservatives have also opposed the Most Favored Nation rule because it relies on price controls to lower drug spending, arguing it could stifle innovation and access to new cures.
Providers were thrilled by the Biden administration’s decision to squash the program for now.
“MGMA is relieved to see that CMS is proposing to rescind the most favored nation model. We have long opposed mandatory and untested models. 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,” the Medical Group Management Association said in a statement on Friday.
President Joe Biden in July directed the federal government to promote competition in the American economy. That included several actions on drug pricing. Biden directed the Food and Drug Administration to work with states on importing prescription medicines from Canada—another leftover Trump initiative—and encouraging the Federal Trade Commission to ban “pay-for-delay” tactics brand-name drug companies use to avoid competition from generics manufacturers. HHS is also supposed to release a comprehensive plan to lower drug prices in the coming weeks.
CMS left the door open for a most favored nation-like rule in the future, noting that its decision to withdraw the Trump-era rule wouldn’t preclude the agency from pursuing a similar policy down the line.
“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 proposed rule said.