Community-based specialty practices have been closely following recent news related to drug pricing policies, particularly the Most Favored Nation (MFN) model, a mandatory demonstration introduced on November 20, 2020 by the Trump Administration that links government payments for Part B drugs to lower prices paid abroad.
The demonstration announcement was issued as an “interim final rule,” originally set to take effect on January 1, 2021. It drew immediate legal challenges, in part because it was never formally proposed as a draft rule with comment opportunity. The Biotechnology Innovation Organization (BIO), the plaintiff in one of the cases, argued that rushing the rule through the regulatory process would harm patients, doctors, and hospitals because it so “drastically transforms” the reimbursement process. Moreover, the rule acknowledged that a portion of the savings netted by the demonstration would result from lack of patient access to pharmaceuticals in some circumstances.
In late December, judges in three cases issued preliminary injunctions to stop implementation of the MFN rule. The first decision came on December 23 when a Maryland judge granted a 14-day restraining order to delay the start of the MFN demonstration in a case that the Pharmaceutical Research and Manufacturers of America brought against the administration. On December 28, a federal judge in California granted a preliminary injunction to stop implementation of the MFN demonstration in the BIO v. Azar case; and on December 31, a federal judge in the U.S. District Court for the Southern District of New York issued a preliminary injunction (specific to EYLEA) in Regeneron Pharmaceuticals v. United States Department of Health and Human Services.
“The preliminary injunction is granted based on the government’s failure to complete the notice and comment procedures required by the Administrative Procedure Act [APA],” Judge Vince Chhabria of the U.S. District Court for the Northern District of California said.
The government argued that the Centers for Medicare & Medicaid Services had good cause to forgo advance notice and comment "because of the particularly acute need for affordable Medicare Part B drugs now, in the midst of the COVID-19 pandemic." The court responded that "executive branch officials may not circumvent clear legal requirements in the eleventh hour to achieve goals they couldn’t accomplish in the normal course.”
In a memo responding to the recent federal Court decisions, HHS stated it will not appeal the Courts’ preliminary injunctions but, as yet, HHS has not indicated whether it will re-issue the rule with the notice and comment procedures required by the APA or otherwise take steps to cure procedural defects in the promulgation of the rule.
As a result of the Court injunctions, President-Elect Biden’s administration will have an opportunity to review and respond to both the MFN Rule and the pending litigation. Meantime, the January 26, 2021, comment deadline set out in the MFN final rule has not been changed.
Another recent policy update had more favorable implications for community-based practices. On December 27, President Trump signed a combined $2.3 trillion coronavirus-relief and FY 2021 government funding package. Congress overwhelmingly approved the $892 billion pandemic relief package along with the omnibus appropriations bill that will keep the government funded through September 2021. In relief to providers, the COVID-19 aid includes, among other provisions, an additional 3-month suspension of the Medicare sequestration (through March 31, 2021). The package also includes an increase of 3.75% to the 2021 Medicare Physician Fee Schedule (for the entirety of the calendar year).