Most Favored Nation Model for Part B Drugs

Network Warns CMS Model Will Disrupt Patient Access to Cancer Treatments

On December 29, 2021, CMS issued a final rule rescinding the MFN Model. This action follows the imposition of a nationwide injunction requiring CMS to complete notice and comment rulemaking procedures before implementing such a model. In the final rule, CMS said it will continue to explore “all options to incorporate value into payments for Medicare Part B drugs, improve beneficiaries’ access to evidence-based care, and reduce drug spending for consumers and throughout the health care system.”

What is the Most Favored Nation (MFN) Model?

In November 2020, the Centers for Medicare & Medicaid Services (CMS) issued an interim final rule with comment period (IFC) implementing the Most Favored Nation (MFN) model, a mandatory Center for Medicare & Medicaid Innovation (CMMI) demonstration that will dramatically alter how patients access and physicians administer Part B drugs—complex injections or infusions such as chemotherapy that are typically administered in a doctor’s office.

Scheduled to begin in January 2021, the MFN model is a mandatory, 7-year payment model to test paying the MFN price for the 50-highest Part B drugs and biologicals. The MFN price would be phased in over time and based on international drug pricing information from 22 similar countries. As a result, the price of drugs will be subject to market forces outside of the US, raising a variety of access issues for Medicare beneficiaries. Instead of the current percentage-based add-on payment, physicians and hospitals would receive a set payment amount for storing and handling drugs that would not be tied to drug prices.

Though the MFN’s goal of lowering costs for Part B drugs is laudable, healthcare stakeholders have expressed myriad concerns why the model will result in negative unintended consequences for patient access, outcomes, and overall costs.

Disrupts Patient Access to Cancer Treatment

The MFN model would fundamentally impact patient access to anti-cancer drugs while putting additional burdens on community providers. The MFN model will impact virtually all community oncology providers as over half of the MFN model drugs are used in the treatment of cancer, many of which have no equivalent alternative available.

At the core of this model, oncologists may be forced to pay more for drugs than the Medicare reimbursement they receive. This dangerous approach will force providers to decide between withholding the standard of care or accepting unsustainable financial losses for these “underwater” drugs.

The CMS Office of the Actuary predicts that beneficiaries unable to access their treatments through their current provider will seek access outside the model, will obtain drugs through 340B providers, or will forgo access. Part B drug utilization is expected to be reduced by 19% by 2023 due to beneficiaries’ inability to access their drugs through the Medicare benefit under the model.

Poorly Designed, Exceeds CMMI Authority

Unlike other payment reforms that are bending the cost curve through comprehensive approaches to patient care, the MFN model is solely focused on drug costs.

The MFN model is mandatory and nationwide, impacting nearly all Part B providers across the country. Without a control group, CMS will have no way of gathering evidence to show the MFN model is able to lower costs without adversely affecting quality of care for beneficiaries as the demonstration is intended to do.

Further, by implementing this model using an “interim final rule,” instead of issuing a proposed rule and going through the requisite notice and comment period, CMS may be violating the Administrative Procedure Act.

There are serious legal implications as to whether CMMI has the authority to implement a demonstration of this size and scope, without any opportunity for meaningful public comment, that CMS’ own actuaries predict will reduce access for Medicare Part B beneficiaries.

Won’t Lower Out-of-Pocket Costs

While CMS claims the MFN model will lower beneficiary cost-sharing through lower drug payments, data show less than 1% of seniors in Medicare would experience lower out-of-pocket costs, because more than 94% of Part B beneficiaries using MFN drugs have supplemental coverage.

Impedes Transition to Value-Based Care

The MFN model would impede voluntary and ongoing investments to transition toward value-based care models, like the Oncology Care Model, which are delivering proven results for patients and the Medicare program.

Stunts Innovation

By linking the cost of Part B drugs to artificial price controls and access restrictions in foreign countries, the MFN model will also limit patient access to novel, pioneering therapies not available in other countries. Should pharmaceutical companies reduce funding for research and development, it will be much more difficult for scientists and researchers to discover innovative, new breakthroughs to treat chronic, complex conditions – including cancer. Ultimately, the MFN model will prevent lifesaving and life-altering drugs from ever coming to market, reducing patient access to current and future treatment.

The US Oncology Network Warned CMS Against IPI

The MFN model is a variation of the International Pricing Index (IPI) model first proposed by the Trump Administration in October 2018. Unlike MFN, the IPI model would have required third-party private sector vendors to procure and distribute drugs, also known as a Competitive Acquisition Program (CAP) structure.

The Network has long opposed the IPI/MFN concept through aggressive advocacy efforts. While appreciative that the IFC seems to have abandoned the concept of a new third-party vendor, The Network remains deeply concerned the MFN model could quickly inhibit patient access to breakthrough therapies while also imposing further complexity in the delivery of cancer care.

Additional Resources

Flashback: International Pricing Index

Physician IPI Commentary