NCD advises CMS on Most Favored Nation rule

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January 19, 2021

WASHINGTON --The National Council on Disability (NCD) is urging withdrawal of a U.S. Department of Health and Human Services rule that includes provisions used by foreign nations in measuring the cost-effectiveness of health treatments, including prescription drugs.

In a letter to the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma, NCD Chairman Neil Romano expressed concerns about the Most Favored Nation (MFN) model interim final rule and its potential to harm seniors with chronic illnesses.

"The need to control Medicare prescription drug costs is important to seniors and the Federal Government alike, but the MFN Rule is highly problematic on several levels," wrote Chairman Romano. "It runs contrary to federal law by adopting foreign drug prices set in reliance on the quality adjusted life year (QALY), a cost-effectiveness measure that devalues the lives of people with chronic illnesses and limits their access to highly effective drugs and treatments; it will cause doctors to stop providing necessary care, thereby worsening chronic diseases and increasing deaths of seniors; and it is a major policy change developed and implemented without providing the opportunity for public comment from affected stakeholders."

At issue is what's known as the quality adjusted life years (QALY). NCD's 2019 report on the topic examined the design and impact of QALYs, which NCD concluded are discriminatory and prohibited by federal Law. NCD found the QALY discriminatory in both its design and its effect. It assigns a lower value to the lives of people with disabilities resulting in a determination that they are too expensive to receive the care that extends their lives. 

"Foreign nations that rely on the QALY to set drug prices have restricted, or denied patients access to effective drugs used to treat chronic conditions and to breakthrough medications," wrote the Chairman.

Concerns about the discriminatory impact of the QALY on patients overseas led to its prohibition in the United States. The Affordable Care Act of 2010 (ACA) prohibits the Secretary of HHS from using the QALY, or similar measure, to determine coverage, reimbursement, or incentive programs under the Medicare program. In addition, HHS’s regulation implementing Section 504 of the Rehabilitation Act prohibits discrimination based on disability in all programs or activities conducted by HHS.

No public comment period was provided in the development of the MFN rule and two federal courts have issued injunctions to delay the MFN Rule’s implementation based on this concern.

"NCD is not aware of any organizations representing the interests of people with disabilities, Medicare beneficiaries, or those with chronic illnesses participating in stakeholder meetings with CMS,” wrote the Chairman. “Real stakeholder engagement requires communication with anyone who is involved in or affected by a course of action. A traditional notice and comment period during the rule's development would have ensured this opportunity."  

Read the letter at NCD.gov.