NCD letter to CMS on Most Favored Nation rule

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January 15, 2021

Ms. Seema Verma, Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Room 445-G, Hubert H. Humphrey Building
200 Independence Avenue, SW
Washington, DC 20201

Dear Ms. Verma: 

I write on behalf of the National Council on Disability (NCD), an independent, nonpartisan, federal agency charged with advising the President, Congress, and federal agencies on disability policy, to express serious concerns about the Most Favored Nation Model Interim Final Rule (MFN Rule).[1] For the reasons detailed below, NCD urges you to withdraw the MFN Rule and engage all affected stakeholders to achieve meaningful policy change that does not 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: 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[2] 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.

I.  The QALY is discriminatory and its use by HHS is prohibited by federal Law

As described in our letter to you dated February 7, 2020,[3] NCD issued a report in 2019 that examined the design and impact of the QALY[4] - a method used by foreign nations in measuring the cost-effectiveness of health treatments, including prescription drugs. 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.

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.[5] In addition, HHS’ regulation implementing Section 504 of the Rehabilitation Act prohibits discrimination on the basis of disability in all programs or activities conducted by HHS.[6] Simply put, CMS cannot adopt foreign countries’ drug prices that are determined by reliance on the QALY for the Medicare program. 

Despite this, in 2018, CMS sought to reduce healthcare costs by modeling Medicare Part B on foreign countries that use the QALY to make coverage decisions: CMS’s Advance Notice of Proposed Rulemaking (ANPRM) proposed an International Pricing Index (IPI)[7] that would base the prices of certain drugs covered by Medicare Part B on prices from 16 other countries, like the United Kingdom, Ireland, and Canada – countries that use QALYs to make benefits and coverage decisions.

In our letter, we shared the recommendations from NCD’s QALY report - that CMS rescind the 2018 ANPRM because of the connection between the IPI and the QALY, as well as the ACA’s prohibition on its use, and encouraged CMS to utilize well-established alternatives to QALYs. Instead, CMS chose to implement the “MFN Model” – a modification of what was proposed in the 2018 ANPRM - that imports foreign drug prices set in reliance on the QALY. 

II.  The MFN model admittedly restricts access to necessary drugs/treatments for seniors with chronic illnesses

CMS explicitly acknowledges that a portion of the MFN Model’s savings “is attributable to beneficiaries not accessing their drugs through the Medicare benefit, along with the associated lost utilization.”[8] In other words, seniors not being able to access their medicines under the MFN Model is part of the way CMS plans on saving Medicare dollars – not by just lowering the cost of certain drugs. Under the MFN Model, when reimbursement rates for the 50 drugs in the MFN Model are cut, physicians “will need to decide if the difference between the amount that Medicare will pay and the price they must pay to purchase the drugs would allow them to continue offering the drugs.”[9] If medical practices cannot purchase drugs for prices lower than the MFN Model’s reimbursement rate, they will not be able to afford to buy the drugs that their patients need. According to CMS, if physicians do not offer MFN Model drugs, Medicare “beneficiaries may experience access to care impacts by having to find alternative care providers locally, having to travel to seek care from an excluded provider, receiving an alternative therapy that may have lower efficacy or greater risks, or postponing or forgoing treatment.”[10] People who have lupus, rheumatoid arthritis, or cancer, or many other severe ailments cannot wait to find medical providers who carry their necessary treatments, nor can they forgo treatment.

Under the MFN model, when physicians are unable to provide needed drugs, seniors have three options: traveling to a healthcare facility that is not part of the MFN Model; finding a hospital with 340B Drug Pricing Program discounts; or choosing to “forgo access.”[11] CMS explains, however, that searching for other places to access needed drugs will be very difficult since because “all regions are covered under the model, beneficiaries seeking a provider outside of the model will be limited to an excluded provider or supplier, such as a critical access hospital.”[12] At a time when hospitals are inundated with coronavirus cases, the last thing seniors need is to be forced to seek their care in one.

CMS estimates that the percentage of seniors that forgo access will grow each year of MFN Model implementation. The “Extreme Disruption” possibility predicts that, for the potential $286.3 billion in Medicare savings, nearly half would be due to seniors foregoing necessary medicines and treatments.[13]

III.  No public comment period was provided in the development of the MFN Rule

The MFN Rule, a significant regulatory change to the Medicare program, was set to take effect on January 1, 2021, without the benefit of a public comment period per standard rulemaking under the Administrative Procedure Act (APA). By issuing an interim final rule, CMS denied the public the opportunity to review the MFN Rule in its proposed form and offer input during its development. CMS instead opened a comment period only after the rule took effect – an action contrary to the establishment of federal policy based on a solid understanding of its effects on the nation. Most of the commentary on the MFN Rule expresses profound concern that CMS implemented a rule with such severe implications without prior public input. Many critics include oncologists and rheumatologists, who anticipate patient deaths due to the inability to access life-saving medications, and others are patients who fear the same. Two federal courts have issued injunctions to delay the MFN Rule’s implementation, based on this concern.[14]

A closely related concern is CMS’s narrow view of stakeholders. The MFN Rule states that CMS had “numerous meetings with stakeholders” in developing the MFN rule,[15] however, 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. 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.  

Seniors with chronic illnesses have been particularly hard-hit by the coronavirus and as it continues to rage through the U.S., seniors should not lose access to crucial medicines or be forced to leave their own doctors and communities to obtain them. CMS should withdraw the MFN Rule immediately and go through the standard procedure for promulgating regulations under the Administrative Procedures Act. Public comments should be considered and used to assist CMS to develop a rule that achieves the goal of containing costs without adopting discriminatory metrics from foreign socialized medicine systems or limiting senior’s access to the healthcare they need. Our seniors deserve better and so do our physicians. 

Respectfully,

Neil Romano
Chairman




[1] Most Favored Nation (MFN) Model, 85 Fed. Reg. 76180 (November 27, 2020).

[2] A chronic illness is a disability under the ADA when it “substantially limits one or more major life activities” of an individual. See, 42 U.S.C § 12102. For the purposes of this letter, “people with disabilities” and “people with chronic illnesses’ are used interchangeably.

[4] Quality Adjusted Life Years (QALYs) and the Devaluation of Life with Disability (NCD, 2019). https://ncd.gov/sites/default/files/NCD_Quality_Adjusted_Life_Report_508...

[5] Patient Protection and Affordable Care Act, Pub. L. 111–148, title VI, § 6301(c), Mar. 23, 2010 (codified at 42 U.S.C. 1320e-1)(e).

[6] Enforcement of Nondiscrimination on the Basis of Handicap in Programs or Activities Conducted by the Department of Health and Human Services, 45 C.F.R. Part 85 (1988).

[7]  Medicare Program; International Pricing Index Model for Medicare Part B Drugs, 83 Fed. Reg. 54546 (October 30, 2018).

[8] Most favored nation Model, 85 Fed. Reg. 76180, 76237.

[9] Id.

[10] Id. at 76244. Most of the 50 medications under the MFN Model do not have equivalent replacements and are used for the treatment of severe, debilitating illnesses.

[11] Id. at 76237.

[12] Id.

[13] Id. at 76239.

[14] Order, Assoc. Comm. Cancer Ctrs. v. Azar, No. 20-cv-03531 (D. Md. Dec. 23, 2020)(Temporary Restraining Order on implementation of MFN Rule based on failure to provide adequate notice and comment procedures under the APA.); Order Granting Motion for Preliminary Injunction, Cal. Life Sciences Ass’n v. Azar, No. 20-cv-08603-VC (N.D. Cal. Dec. 28, 2020)(Prohibiting CMS from implementing the MFN Rule based on a failure to follow notice and comment procedures under the APA.). 

[15] Id. at 76182 and 76199 (“In addition to comments received to the October 2018 ANPRM, we also conducted significant outreach to stakeholders, such as stakeholder meetings and conference calls, to gather targeted feedback.”).