Federal District Courts Enjoin CMS’s Most Favored Nation Model Rule for Medicare Part B Drug Reimbursement
Saturday, January 9, 2021
At a time when prescription drug costs have been increasingly burdensome for Medicare beneficiaries, and the American taxpayer, the Centers for Medicare and Medicaid Services (“CMS”) issued an interim final rule with comment period on November 27, 2020,[i] explicitly recognizing, as a basis for the rule, “[i]ncreases in drug prices” that “far exceed prices in other countries.”[ii] and establishing a new reimbursement methodology for the payment of selected drugs under Part B of the Medicare program.[iii]
The new rule implements the “Most Favored Nation Model” (“MFN Rule” or “Model Rule”) which sought to link drug costs under Medicare Part B for 50 high-cost drugs to the lowest price of a non-U.S. member country of the Organization for Economic Co-operation and Development.[iv] The expectation was that the MFN Rule would test a new reimbursement scheme to lower drug expenditures and save the federal government more than $80 billion and Medicare beneficiaries $28.5 billion during a seven-year period.[v] The rule was promulgated under the authority of 42 U.S.C. § 1315a, and CMS specified an implementation date of January 1, 2021 for the new rule.