The Biden administration is rescinding ex-President Trump's unimplemented most favored nation drug pricing rule, which was disliked by 340B entities and drug manufacturers.

Biden Axing Trump’s “Most Favored Nation” Drug Pricing Rule that 340B Entities and Pharma Both Disliked

The Biden administration is rescinding an unimplemented Trump-era regulation that would have pegged Medicare Part B drug reimbursement for 50 expensive, physician-administered drugs on the lowest price that drug manufacturers provide in similar countries.

The U.S. Centers for Medicare & Medicaid Services (CMS) published a final rule withdrawing Trump’s so-called most favored nation (MFN) rule on Dec. 29. The recission takes effect on Feb. 28.

Groups representing 340B hospitals backed CMS’s decision.

Hospital group 340B Health, for example, pointed out in comments to CMS in October that Part B drug reimbursement under the MFN model could be as much as 65% less than a drug’s average sales price (ASP).

“Medicare currently pays most 340B hospitals under the outpatient prospective payment system (OPPS) for separately paid drugs at ASP – 22.5%,” the group said. “An MFN price of ASP – 65% would result in a massive payment cut for those 340B hospitals, and an even larger payment cut for the 340B hospitals that are not currently subject to reduced payment rates under the OPPS. 340B hospitals are not in a position to absorb further payment reductions on top of existing Medicare payment cuts.”

The drug industry also supported withdrawing the MFN rule. Pharmaceutical Research and Manufacturers of America (PhRMA) told CMS in its comments in October that Trump’s rule “was misguided, illegal, and would have cause widespread, serious harm to patients, providers and biopharmaceutical innovation in the U.S.”

The Biden administration and congressional Democrats have been unable to agree on a massive domestic, economic, and environmental policy bill that is expected to let the federal government negotiate prices for drugs covered under Medicare Parts B and D. PhRMA said drug pricing language in the House-passed version of the so-called Build Back Better Act would “make a broken insurance system worse and throw sand in the gears of medical progress.” Groups that represent 340B covered entities have said that while they are for lowering drug prices, they worry about potential unintended consequences that would diminish entities’ 340B savings and revenues.

The U.S. Senate reconvened yesterday following its winter holiday break. The House is scheduled to reconvene on Jan. 10.

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