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PhRMA and others file injunction to stop favored nation rule from taking effect on January 1, 2021

American Hospital Association is among the providers against the rule that would cut drug reimbursement.

Susan Morse, Managing Editor

The Pharmaceutical Research and Manufacturers of America, the Association of Community Cancer Centers, the Global Colon Cancer Association and National Infusion Center Association have filed a motion for a temporary restraining order and preliminary injunction to stop the Most Favored Nation rule from taking effect on January 1, 2021.

The motion and accompanying memorandum of law filed on Thursday assert that, because the rule would cause immediate and irreparable harm, the court should halt implementation. 


The rule would lower prescription drug costs by paying no more for Medicare Part B drugs and biologicals than the lowest price that drug manufacturers receive in other similar countries.

It would create a mandatory, seven-year payment model for the 50 highest-cost drugs and biologics in Medicare Part B. It replaces the existing reimbursement formula that adds a 6% administration fee to the average sales price of the drug with a new reimbursement system based on international pricing information from 22 different countries. 

Providers would instead be reimbursed the "most favored nation" price for the drug plus a fixed payment to cover the cost of procuring, storing, handling and administering these therapies. 

When the interim rule was released in November, the American Hospital Association said it would cut drug reimbursement to hospitals by an average of 65% when fully phased in. The payment change would give providers a flat add-on amount for each dose of an MFN drug, instead of a percentage of each drug's cost, the AHA said. 

Other provider groups have come out against the rule.

The American College of Rheumatology has warned that the new rule would dramatically disrupt patient access to critical therapies and threatens the financial solvency of many practices, particularly those hard hit by the COVID-19 pandemic. 

The price of the drug internationally could be much lower than what the provider is able to purchase it at domestically, the ACR said.

Also, Vizient, which negotiates pricing with suppliers on behalf of more than half of the hospitals in the United States, sent a letter to CMS urging the agency to delay the start of its implementation of its Most Favored Nation model for drug pricing.


The request for an injunction follows a lawsuit filed December 4 by the Pharmaceutical Research and Manufacturers of America, the Association of Community Cancer Centers, the Global Colon Cancer Association and the National Infusion Center Association in the U.S. District Court for the District of Maryland. 

The lawsuit asserts that the Most Favored Nation Interim Final Rule exceeds the statutory authority of the Center for Medicare and Medicaid Innovation under the Affordable Care Act, raises serious constitutional questions about using a regulatory process to rewrite Medicare statute and transform the reimbursement system, and improperly fails to follow required rulemaking by skipping notice and comment procedures.

The MFN Model Interim Final Rule was finalized using an abbreviated regulatory process.

The plaintiff organizations want the rule to be declared is unconstitutional and invalid. 


PhRMA Executive Vice President and General Counsel James C. Stansel said, "The Most Favored Nation Interim Final Rule is bad policy that is contrary to law and that the administration expressly admits will disrupt patients' access to medicines. By pushing through a nationwide, mandatory policy change, the administration is essentially rewriting the Medicare statute. It is circumventing Congress entirely, ignoring the roles assigned to the executive and legislative branches. The U.S. Constitution is clear: The administration does not have the legal authority to write new laws or override existing laws through regulations. Laws must be passed by both chambers of Congress and signed by the president."

Twitter: @SusanJMorse
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