Office-Administered Drugs Targeted by Most Favored Nation Rule
posted: December 10, 2020
Recently, the Center for Medicare and Medicaid Services (CMS) released an interim final rule seeking to implement the “Most Favored Nation” (MFN) pricing scheme for Medicare Part B drugs. The new rule would adjust reimbursement to providers and suppliers for a period of seven years by using a payment methodology that takes into account international pricing and a fixed add-on amount. The interim final rule builds on the International Pricing Index (IPI) concept published in 2018, however, the most favored nation concept goes further by setting the target price at the lowest price available in indexed countries, rather than a price derived from an evaluation of prices in indexed countries. Additionally, the interim final rule proposes mandatory nationwide participation, rather than participation in half the country.
The MFN rule implements a nationwide program to lower reimbursement for the top 50 Medicare Part B drugs based on international drug prices. Over one fifth of the drugs included in the model are routinely used by rheumatology patients.
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Add-on-fees would also be changed under the MFN model. The current add-on-fee would be replaced with a flat fee based 6.1224% of ASP claims during 2019. For biosimilars, this calculation will begin by using the historical ASP of the reference product. Moving forward, and for the first performance year of the demonstration, the calculated add-on will be adjusted upwards using an inflationary modifier.
It is important to note that the MFN interim final rule has been published on the tail end of the current administration’s tenure in office, and the official comment period extends beyond the start of the next administration. Whether the new administration will continue to advance this program is unclear. (CSRO, Nov. 24, 2020)