ACR warns CMS against 'most-favored nation' pricing model for Medicare Part B drugs
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The American College of Rheumatology has urged CMS to reconsider its recent interim final rule that would establish a “most-favored nation” payment model for Medicare Part B drugs, arguing it would disrupt patient access to rheumatic care.
In its press release, the ACR contended that the rule “threatens the financial solvency of many rheumatology practices — particularly those located in rural and underserved areas, including those that have been hardest hit by the COVID-19 pandemic — and jeopardizes the ability of rheumatologists to provide treatments to patients most in need.”
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“While the ACR supports efforts to rein in high drug costs, we strongly believe this policy will come at great expense to the patients we serve,” David Karp, MD, PhD, president of the ACR, said in the release.
“As currently written, the [most-favored nation] interim final rule makes dramatic cuts to specialty providers like rheumatologists who administer Part B drugs in hopes that manufacturers will be motivated to lower drug prices on their own,” he added. “However, we have not seen this occur with similar efforts in the past, and drug prices have continued to rise for patients. We are concerned this model will severely restrict patient access to treatment while doing little to address the root causes of high prescription drug prices.”
The New Rule
The new CMS interim final rule follows an executive order signed by President Donald J. Trump on Sept. 13, which included an order to test a “most-favored nation” pricing model for certain high-cost Medicare Part B and Part D drugs. CMS posted the interim final rule and public comment information in the Federal Register on Nov. 27.
According to a fact sheet published by CMS, the rule will lower prescription drug costs by paying no more for high-cost Medicare Part B drugs and biologicals than the lowest price that drug manufacturers receive in other similar countries. In addition, the most-favored nation model will pay providers a flat add-on amount for each dose of an eligible drug, rather than a percentage of each drug’s cost, removing the tie between drug cost and the add-on amount.
“One of the largest drivers of increasing Medicare spending is the growing prices for physician-administered separately payable Medicare Part B drugs, which have risen an average of 11.5% annually since 2015, with total spending of approximately $30 billion in 2019,” according to the CMS fact sheet. “These high, and increasing, costs are borne by Medicare beneficiaries and taxpayers and are the direct result of: 1) a lack of competitive market forces on Medicare Part B drug costs; and 2) an incentive system that pays hospitals, physicians (and non-physician practitioners) and other providers based on the volume of the drugs they use and the prices drug manufacturers set.”
According to CMS, the most-favored nation model — mandatory for Medicare providers and suppliers who receive separate Medicare Part B fee-for-service payments for the model’s included drugs, with certain exceptions — will operate for 7 years, from Jan. 1, 2021 to Dec. 31, 2027. During this time, CMS will monitor and evaluate the impact of the model on patient access, program costs and the quality of care. In addition, there will be a financial hardship exemption for certain participants whose revenue is significantly affected by the most-favored nation model, CMS said.
Concerns from the ACR
The problem with this new pricing model, according to the ACR, is that the reimbursement amount providers would receive, based on international prices, would be much lower than the domestic prices providers in the U.S. would be subject to. The group is also skeptical that CMS’ proposal of an additional fixed payment — to cover the cost of procuring, storing, handling and administering these drugs — would sufficiently fill the gap.
“The new fixed payment rate will likely not be enough to cover the cost of acquiring and administering many of the therapies most frequently administered by rheumatologists, which will require practices to either operate at a loss or forgo offering the treatment altogether,” Karp said in the release. “This will be detrimental to provider solvency and patient access to medications.”
According to the ACR, citing CMS’ own estimates, the new model would reduce reimbursements by approximately 65% once fully implemented, if current manufacturer pricing structures continue. In addition, the ACR stated that a “significant portion” of the projected savings from the new model is expected to come from patients losing access to care.
“At a time when many health care providers have already been stretched thin due to the COVID-19 pandemic, it is dangerous for CMS to rush through a payment model that further compromises providers’ ability to offer quality rheumatology care,” Karp said in the ACR release. “The ACR looks forward to working collaboratively with CMS officials to implement drug pricing reforms that do not put rheumatic disease patients, and the providers they depend on for care, in jeopardy.”
Asked to respond to the ACR statement, a CMS spokesperson said the agency does not comment on matters currently in litigation.
In addition to the ACR’s efforts, the Coalition of State Rheumatology Organizations is also actively fighting the new pricing model in all three branches of the federal government, according to its president, Madelaine A. Feldman, MD. She added that the CSRO is also part of the legal challenge against the new rule.
“We are sending our most-favored nation comments to CMS, and we are integrally involved in one of the challenges filed in court against the most-favored nation model,” Feldman said. “Additionally, we worked closely with the Community Oncology Alliance (COA) in adapting their most-favored nation toolkit to help rheumatologists around the country to voice their opposition to Congress against this ill-conceived policy.”
For more information:
Interim Final Rule information on the Federal Register
Perspective
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David A. McLain, MD, MACR, FACP, FRCP
President Trump called for a ‘most-favored nation’ pricing for pharmaceuticals, which would give the U.S. government the best price charged in 22 countries. The disparity for prices charged for the same medication in different countries has led some of our patients to receive medications from Canada, for example, where patients can often get a 90-day supply at the cash price in Canada for a one-month supply in the US.
I purchased a 100-gram tube of brand name Voltaren gel 2% (double strength) in Greece a year ago for US$10, while patients in the U.S. were paying more than $150 for the 1% brand name. I wondered why patients in the U.S. pay such high prices for the same medications. This goal of having a ‘world price’ is a good idea but the implementation with a 1-month notice was not.
Any pre-purchase of medications would result in a loss for the provider. There was no phase-in to the plan. Rheumatologists were sending out letters to patients due for infusions starting after Jan 1., 2021, that their infusion had to be postponed. Two federal judges did grant a 2-week injunction to prevent implementation of this rule, but we need Congress to get involved.
The specialties concerned with this change include rheumatology, hematology/oncology, gastroenterology, neurology, dermatology, and ophthalmology (biologics being used for wet macular degeneration). None of these physicians want to provide a ‘buy and bill’ service that results in the payments putting them “underwater” — not many businesses stay in business when their costs exceed their income. Patients will not have access to a medication that is reimbursed below its cost; the CMS rule also includes changing the amount of payment for administration to a flat fee per dose.
All the advances of the past 20 years with biologics are at risk of being set back. Contact your legislators using this link: https://www.rheumatology.org/Advocacy/Legislative-Action-Center. It only takes a few minutes and the site automatically locates your representative and senators with your zip code.
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