Proposed Most Favored Nation Oncology Drug Pricing Model Withdrawn, Garnering Praise From ASCO

The proposed Most Favored Nation (MFN) pricing model has been withdrawn by the Centers for Medicare & Medicaid Services (CMS), earning praise from the American Society of Clinical Oncology (ASCO), according to a press release from the organization.¹

The model was proposed in November 2020 and set for implementation in January 1, 2022, but sparked concern within the oncology community as it would significantly reduce Medicare beneficiary access to lifesaving cancer treatments. The mandatory model would have lasted from January 1, 2021, to December 31, 2027, and impact 50 of the most reimbursed drugs under Medicare Part B.² Since the time of initial proposal, ASCO objected to the proposed model and plans to continue challenging the implementation of a mandatory demonstration model on oncology practices. The organization in its concern regarding the impact such a model could have on patients and providers alike.

An analysis published by ASCO indicated that oncology practices were likely to encounter notable hurdles in providing their patients with necessary treatment under the model, citing that up to 19% of beneficiaries would be losing their access to care.³ Additionally, roughly 10% of patients would be moved from the affected private practices to 340B-qualified hospitals or Prospective Payment System (PPS)–exempt hospitals.

The organization conducted the analysis by assessing billing and reimbursement data through its network of oncology practices and centers, with a total of 28 independent physician and hospital-based practices that represented $924 million in Medicare allowable payments. Those examined spanned different specialties across 20 states, ranging from urban to rural locations with anywhere from 4 to 110 oncologists. Critical access hospitals and prospective payment system–exempt cancer hospitals were excluded from the analysis.

Top 10 oncology drugs impacted by the MFN interim final rule (rates per billing unit)

Among the 50 drugs included under the model, hematology/oncology was cited as being the top billing specialty for 29 therapeutics. Additionally, the hematology/oncology space was reported to be in the top 3 specialties billing for 38 drugs. The analysis revealed that the MFN–priced drugs comprise 83% of physician-provided therapeutics and would result in a projected decrease in payments of –14% in 2021, –27% in 2022, –39% in 2023, and –52% from 2024 to 2027.

In terms of hospital-provided drugs, investigators determined Medicare-allowable payments under 4 categories:

• MFN-priced: 340B-purchased drugs subject to a cap of the average sales price (ASP) less 22.5% (19%)
• MFN-priced drugs that weren’t paid for through the 340B program (66%)
• ASP priced: 340B-purchased drugs reimbursed at ASP less 22.5% (2%)
• ASP priced drugs not purchased through the 340B program and reimbursed at ASP plus 6% (12%).

This will lead to a reduction in Medicare allowable payments to outpatient hospital oncology departments, including –10% in 2021, –23% in 2022, –36% in 2023, and –50% in 2024 to 2027.

“The MFN will result in significant decreases in Medicare Part B reimbursement to

private practices and hospital outpatient oncology departments for the duration of the model. CMS expects that MFN will impact Medicare Advantage in 2023, resulting in further decreases. While some practices may be able to lower acquisition prices to match decreased reimbursement, the CMS Office of the Actuary estimates that 11% of impacted private practice physicians will shift the care of their patients to 340B-qualified hospitals or PPS-exempt hospitals, and that 19% of Medicare beneficiaries will lose access to the 50 therapies included in the MFN interim final rule,” the investigators concluded.

Mandatory participants for the model would include Medicare physicians, non-physician practitioners, supplier groups, hospital outpatient departments, ambulatory surgical centers, and any other providers or supplies who get separate Medicare Part B fee-for-service payments for any of the drugs included in the model. The model focused on pharmaceuticals that comprised a high percentage of Medicare Part B drug spending and allowed the CMS to add agents that have moved into the top 50 drugs on a yearly basis depending on updated Part B spending every year.

The model proposed that Medicare could pay for cancer drugs using a formula that incorporated the lowest adjusted international price for the treatment, which was derived from the lowest gross domestic product–adjusted price, as opposed to paying for drugs based on the ASP. Known as the MFN Price, it was set to be phased in throughout the first 4 years of the model, including phasing in 25% per year for years 1 through 4, and 100% for years 4 through 7.

Additionally, the U.S. Department of Health and Human Services had finalized its rebate rule, removing safe harbor protection for price reductions linked with purchasing drugs to plan sponsors under Medicare Part D. This was to be done directly or via pharmacy benefit managers who would be under contract with plan sponsors, barring any price reductions necessitated by law. Moreover, any price reductions that took place between manufacturers and plan sponsors within part D via up-front discounts would be eligible for protection within the proposed safe harbor for point-of-sale price reductions.

ASCO stated that it will continue working alongside CMS in order to continue combatting the increasing costs of cancer medications, but that it will also fight any models that would negatively impact access to care for Medicare beneficiaries.

References

1. Most Favored Nation model’s withdrawal complete; ASCO applauds decision preserving access to care. News release. American Society of Clinical Oncology. January 4, 2022. Accessed January 7, 2022. https://bit.ly/3q4fSoA
2. Administration releases Most Favored Nation drug pricing model; cuts rebate safe harbor protections under Medicare Part D. News release. American Society of Clinical Oncology. November 20, 2020. January 7, 2022. https://bit.ly/3JPuJuP
3. ASCO PracticeNET analysis of the Medicare Most Favored Nation interim final rule. American Society of Clinical Oncology. Accessed January 7, 2022. https://bit.ly/339FMhy