SummaryYesterday, the Administration released the awaited “Most Favored Nation” Executive Order (EO), which calls for a model that would cap the price Medicare pays for select Part B and D drugs.
The “most-favored-nation” price would be the lowest price for a product sold across member countries of the Organization for Economic Cooperation and Development with a comparable per-capita gross domestic product (GDP), after adjusting for volume and differences in GDP.
The EO directs the Secretary to immediately take steps to implement rulemaking that would test a payment model for certain high-cost Part B drugs and to develop and implement rulemaking that would test a payment model for high-cost Part D drugs with insufficient competition.
“The focus for implementing this drug pricing policy now turns to rulemaking and CMMI,” said Milena Sullivan, principal at Avalere. “Given previous action on international reference pricing in Part B, the regulatory process for physician-administered drugs is clearer than for Part D, where the administration has not yet released anything publicly.”
What’s the timing?
“With less than 50 days to go until Election Day, it seems unlikely any policy change will be implemented before votes are cast,” said Matt Kazan, principal at Avalere. “With that said, you could imagine a scenario where Part B reforms are effective before Inauguration Day. Part D changes, however, will likely need to wait until the 2022 plan year.”
What’s the election impact?
“This most recent activity only increases the amount of attention drug pricing is likely to get on the campaign trail,” said Elizabeth Carpenter, Head of Advisory Services at Avalere. “The President is likely to focus on the EO and future rulemaking in the political context, despite the fact that policy change has yet to be made.”
What should stakeholders do?
“Given the unpredictable nature of policymaking and the heightened political environment, healthcare stakeholders need to prepare for a range of scenarios,” said Lance Grady, practice director at Avalere. “In particular, businesses need to be prepared for change that is potentially more rapid than is typical, given the looming political deadlines.”
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