Most Favored Nation MFN Model rule (2022)
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The Most Favored Nation (MFN) Model rule is a significant rule issued by the Centers for Medicare and Medicaid Services (CMS) effective February 28, 2022, that rescinds the Most Favored Nation Model interim final rule with comment period that appeared in the November 27, 2020, Federal Register following series of lawsuits and a nationwide preliminary injunction on the original rule.[1]
Timeline
The following timeline details key rulemaking activity:
- February 28, 2022: Final rule took effect.[1]
- August 10, 2021: Centers for Medicare and Medicaid Services issued the proposed rule and comment period began.[1]
- November 27, 2020: Most Favored Nation Model interim final rule appeared in the Federal Register.[1]
Background
The following is the background of the rule from the rule's entry in the Federal Register:[1]
On August 10, 2021, a proposed rule (referred to as "the August 2021 proposed rule") was published in the Federal Register (86 FR 43620) with the intention to rescind the Most Favored Nation (MFN) Model interim final rule with comment period (85 FR 76180) from November 27, 2020. The November 2020 MFN Model aimed to establish a nationwide 7-year mandatory model for Medicare Part B drugs, but it was not implemented on January 1, 2021, due to four lawsuits and a nationwide preliminary injunction issued on December 28, 2020, by the U.S. District Court for the Northern District of California in the case of California Life Sciences Ass'n v. CMS, No. 3:20–cv–08603.
Summary of the rule
The following is a summary of the rule from the rule's entry in the Federal Register:
| “ | This final rule rescinds the Most Favored Nation Model interim final rule with comment period that appeared in the November 27, 2020, Federal Register.[1][2] | ” |
Summary of provisions
The following is a summary of the provisions from the rule's entry in the Federal Register:[1]
| “ | Given that the nationwide preliminary injunction precluded implementation of the MFN Model on January 1, 2021, as contemplated, that multiple courts found procedural issues with the November 2020 interim final rule, and that stakeholders expressed concern about the model start date, in the August 2021 proposed rule (86 FR 43620), we proposed to rescind the November 2020 MFN Model interim final rule and remove the regulations at 42 CFR part 513 (these actions would withdraw the MFN Model), and invited comments on our proposal. We received 34 timely items of correspondence from health care providers (such as health systems, hospitals, physician practices, and infusion centers), physician specialty groups, drug manufacturers, pharmaceutical industry groups, pharmacy benefit managers, patient advocacy groups, and individuals.
Comment: In general, the comments on the August 2021 proposed rule closely aligned with the comments we received in response to the November 2020 MFN Model interim final rule. Several commenters expressed general support for lowering drug prices. However, all but one of the commenters supported our proposal to rescind the November 2020 MFN Model interim final rule and remove the associated regulatory text at 42 CFR part 513. A commenter supported advancing the MFN Model, stating that the model “is a guarantee to every American that we are not overpaying for the life sustaining medications they need. . . . [G]ive Americans the same drugs for the same price as the rest of the world.” Several commenters urged us not to implement the MFN Model or similar models, such as any model that would test international or domestic reference pricing now or in the future. Many commenters expressed concerns about the potential for beneficiaries to lose access to drugs included in the MFN Model if manufacturers did not lower prices to align with the model payment amount, the potential for an MFN Model start to exacerbate practice struggles during the COVID–19 pandemic, and the potential financial hardship and administrative burden that hospitals, physician practices, and 340B covered entities may experience related to the MFN Model. Some commenters described legal concerns that were raised in the model-related lawsuits. Response: We appreciate commenters' support for our proposal to rescind the November 2020 MFN Model interim final rule and remove the associated regulatory text at 42 CFR part 513 (these actions would withdraw the MFN Model). We appreciate the commenter's concern that Americans are paying more for drugs than consumers in other countries pay, although we disagree with the commenter that the MFN Model would guarantee that Americans would pay the exact amount that others pay for drugs, as the MFN Model was designed as a 7-year model test that would phase in the MFN Price over time, and further, there is no one international price that others outside the United States pay. We will continue to carefully consider this commenter's feedback and other stakeholders' feedback that we received as we 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. As stated in the Department of Health and Human Services' (HHS') Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in the American Economy (September 9, 2021), there are many administrative tools that could be used to promote competition and reduce drug pricing, including testing models in Medicare Part B using value-based payments, in which payment for drugs is directly linked to the clinical value they provide patients. Comment: Some commenters offered views on potential policies and alternative payment models that HHS and CMS could consider. Response: We thank stakeholders for their comments. These topics are outside the scope of this rule, but we may consider the comments in the future. Final Decision: After considering the comments on our proposal, we are finalizing our proposal as proposed. In this final rule, we rescind the November 2020 MFN Model interim final rule and remove the associated regulatory text at 42 CFR part 513. Thus, as a result of this final rule, the MFN Model is withdrawn, effective on the date specified in the DATES section of this final rule.[2] |
” |
Significant impact
- See also: Significant regulatory action
Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.
Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]
The text of the Most Favored Nation (MFN) Model rule states that OMB deemed this rule economically significant under E.O. 12866:
| “ | Based on our estimates, OMB's Office of Information and Regulatory Affairs has determined this rulemaking is “economically significant” as measured by the $100 million threshold, and hence also a major rule under Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act). Accordingly, we have prepared a regulatory impact analysis that to the best of our ability presents the costs and benefits of the rulemaking.[2] | ” |
Text of the rule
The full text of the rule is available below:[1]
See also
External links
Footnotes
