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Public Policy Newsletter Article

Biocom California Stands Firm Against Most Favored Nation Rule

  • 2020-12-03T16:00:00.000+0000
  • Author: Laure Fabrega

On November 20, Biocom California issued a statement expressing strong opposition to the most favored nation interim final rule (IFR) released by the Centers for Medicare and Medicaid Services (CMS) that day. The rule would impose arbitrary foreign price controls on drugs and biologics that are administered in physicians’ offices and treat some of our country’s sickest and most vulnerable patients. Click here to view the rule, here for HHS’ fact sheet, and here for HHS’ press release.

“Biocom California is deeply disappointed that this model was released as an interim final rule, as it will disproportionally affect small companies that rely on a predictable and steady environment. It makes sweeping changes across all states, has an almost immediate implementation date and had no input from stakeholders for this specific incarnation. This model will undeniably reduce long-term investments in research and hamper the development of new treatments and cures. California, which is one of the world’s leaders in biomedical innovation, would be among the first to suffer,” said Joe Panetta, president and CEO of Biocom California. Click here for the full release.

Biocom intends to submit comments opposing the rule. Please send feedback to Biocom’s Director of Federal Policy and Government Affairs, Laure Fabrega, at [email protected]. The rule will:

– Test aligning Medicare Part B payments for certain drugs to the lowest price for similar countries, after applying a GDP-adjuster;
– Be a mandatory 7-year CMMI demonstration project;
– Apply to the 50 drugs and biologics with the highest Medicare Part B spending;
– Allow drugs to be added annually to include drugs that rose to be among the top 50 that year (drugs already included will remain);
– Have a drug payment amount that will phase in the lowest price by blending it with the average sales price (in years 4-7, the MFN Price will be fully phased-in);
– Accelerate the phase-in of the MFN price for a drug if U.S. prices rise faster than both inflation and the MFN price;
– Use the lowest price of 22 countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Japan, Republic of Korea, Luxembourg, Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom;
– Apply to all Medicare-participating physicians, hospitals and ambulatory surgical centers in all 50 states and territories;
– Replace the ASP percentage add-on with a flat add-on amount per dose that will be the same for each MFN drug;
– Waive beneficiaries' cost-sharing on this add-on payment;
– Be effective on January 1, 2021;
– Save the government $85.5 billion.

Note that the Administration also released a final rule to eliminate the current system of drug rebates in Medicare Part D by excluding rebates on prescription drugs paid by manufacturers to pharmacy benefit managers (PBMs) and Part D plans from safe harbor protection under the Anti-Kickback Statute (AKS). Click here to view the rule and here to view the fact sheet. The effective date is January 1, 2022.