CMS retreats from ‘most favored nation’ drug pricing scheme

Former President Trump’s plan to peg the price of some drugs to those paid in other developed nations was always controversial. Not long after Trump unveiled an executive order supporting the idea on Sept. 13, 2020, organizations, including PhRMA and Regeneron, filed lawsuits to block the rule.

Several courts agreed that the policy, which CMS codified in November 2020, had procedural issues. Namely, the agency provided less time for involved parties to comment on the rule than the Administrative Procedures Act prescribes.

HHS predicted the rule would save the federal government $85 billion over the next seven years.

Now, the Biden administration is moving to revoke the interim final rule that would have enacted the rule.

It remains unclear, however, what scheme to reduce drug pricing might follow. The Biden administration has stated that it is eyeing ways to reduce spending on Medicare Part B drugs.

The ‘most favored nation’ rule was not just unpopular with drug companies. Hospitals had also lamented that the plan would hurt their profitability by shifting the burden of cost reductions to them instead of the pharma industry or Medicare.