White House Directs HHS to Model “Most-Favored-Nation” Price Caps

“On September 13, 2020, the White House issued an Executive Order titled ‘Lowering Drug Prices by Putting America First’ (the Executive Order), which directed the Secretary of the US Department of Health and Human Services (the Secretary) to implement payment models pursuant to which Medicare would pay no more than the ‘most-favored-nation price’ for certain Part B and Part D drugs and biologics. If implemented, such payment models could transform the drug and biological reimbursement landscape. However, because the models will require implementation through the formal rulemaking process, their path to actual implementation is highly uncertain, and the Executive Order will not result in short-term changes…”

Analysis

“The Executive Order is the culmination of years-long discussions and posturing as the Trump administration has sought to take meaningful steps to reduce the prices of prescription drugs in the United States. Although Congress has introduced legislation to address drug pricing, the bills have not gained necessary bipartisan support to move forward. In the absence of drug price legislation, the Trump Administration was left with a limited number of relatively narrow opportunities to meaningfully address drug pricing.”

“The Medicare payment model demonstration authority was one such vehicle. If implemented as previously described by the Centers for Medicare and Medicaid Services (CMS) and particularly if expanded to Part D drugs, the IPI Model would make sweeping changes to the drug and biological supply chain and pose a variety of expected and unknown implications for drug and biological manufacturers, distributors, group purchasing organizations, hospitals, physician clinics and pharmacies, among other industry stakeholders.”

“Significant uncertainties remain as to whether this attempt at restructuring the drug pricing landscape has any chance of proceeding given the rulemaking timeline and whether President Trump will be elected for a second term. However, it is noteworthy that the Administration and House Democrats have proposed similar IPI drug pricing models. Stakeholders should expect to continue to see legislative and regulatory proposals in 2021 that consider some form of international reference price no matter who is elected President…” Read the full article here.

Source: White House Directs HHS to Model “Most-Favored-Nation” Price Caps for Part B and D Drugs – By Emily J. Cook, Steven J. Schnelle, Cathy Ren, and Rodney Whitlock, Ph.D, September 16, 2020. National Law Review.

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