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HHS Releases Prescription Drug Rules

November 23, 2020

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CONTACTS
Mary Mullaney, Director, Hospital Payment Policies

The Department of Health and Human Services (HHS) released two prescription drug rules on Nov. 20 that are aimed at providing Medicare beneficiaries with discounts at the point of sale for Part D drugs and aligning prices for certain Part B drugs and biologics to prices in other countries, referred to as the “most favored nation (MFN) price” [see Washington Highlights, July 28].

MFN Model Interim Final Rule With Comment (IFC)

Under this IFC, the Center for Medicare and Medicaid Innovation will implement a mandatory, nationwide model to align payment for certain Medicare Part B drugs and biologics with prices in similar Organisation for Economic Co-operation and Development countries. The seven-year model will begin Jan. 1, 2021, and phase in the MFN pricing over four years — with the model paying 100% of the MFN pricing to providers in years five through seven. The model price cannot exceed the average sales price (ASP) for the drugs. The current ASP of 6% add-on will be replaced with a flat payment per dose. The model includes a financial hardship exemption for MFN participants that are significantly affected by their participation in the model.

For more information on the MFN model, read the fact sheet.

Drug Rebate Final Rule

The drug rebate final rule excludes drug rebates from safe harbor protection under the anti-kickback statute. Beginning Jan. 1, 2022, rebates on prescription drugs will be required to be applied at the point of sale on Part D drugs to decrease beneficiaries’ out-of-pocket costs. Insurers and pharmacy benefit managers have argued that rebates are used to decrease premiums and drug costs for all beneficiaries and that changes to how rebates are used will increase premiums and some beneficiaries’ cost-sharing.

For more information on the drug rebate final rule, read the fact sheet.

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