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ASHP Submits Comments to CMS regarding the Most Favored Nation (MFN) Model

Center for Medicare & Medicaid Services

January 26, 2021

Elizabeth Richter
Acting Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-5528-IFC 
P.O. Box 8013 Baltimore, MD 21244–1850


Re: Docket No. CMS-5528-IFC - “Most Favored Nation (MFN) Model”

Dear Acting Administrator Richter:

ASHP appreciates the opportunity to submit comments to the Center for Medicare & Medicaid Services (CMS) regarding the Most Favored Nation (MFN) Model interim final rule with comment period (the “IFC”). ASHP represents pharmacists who serve as patient care providers in acute and ambulatory settings, including hospitals, health systems, and clinics. The organization’s more than 55,000 members include pharmacists, student pharmacists, and pharmacy technicians. For more than 75 years, ASHP has been at the forefront of efforts to improve medication use and enhance patient safety.

1. Rescind the IFC and Meet with Stakeholders

In order to protect patient access to medications and avoid destabilizing pharmacy practice in hospitals, health systems, outpatient departments and other Medicare Part B sites of care, CMS must rescind the IFC. ASHP’s objections to the IFC are both policy and process based. From a policy standpoint, the IFC fails to effectively address high manufacturer list prices, while devastating provider reimbursement and severely impacting patient access to critical medications. From a process standpoint, the IFC was rolled out precipitously, skirting normal notice and comment requirements on the basis of “good cause” – namely, high drug prices that the agency has been aware of for at least a decade. We agree that high drug prices are a pressing public health issue, but given their ubiquity and the disruptive nature of this policy change, using them to sidestep notice and comment procedures to implement sweeping changes during a pandemic is arbitrary and capricious. Although ASHP is not a party to the ongoing litigation regarding the IFC, we support the arguments of the healthcare organizations challenging it. The only reasonable solution is to rescind the IFC and start fresh.

ASHP, as a member-driven organization and a lead member of the Steering Committee of The Campaign for Sustainable Rx Pricing (CSRxP), shares CMS’s goal of reducing drug prices. We are committed to developing bipartisan, market-based solutions that promote competition, transparency, and value to improve affordability while maintaining patient access to innovative prescription drugs that can improve health outcomes and save lives. To that end, we encourage CMS to meet with stakeholders, including hospitals, health systems, physicians’ offices, and community pharmacies, to explore comprehensive reform proposals focused on high drug costs and carefully tailored to avoid harming providers and undermining care quality. Specifically, we urge CMS to take a considered approach to reform, instead of pursuing rushed implementation of radical systemic changes through untested models like the one detailed in the IFC. Engaging stakeholders in these policy discussions should assist CMS in appropriately targeting reform and ensuring patient care and access remain protected.

2. Additional MFN Considerations

As noted above, ASHP believes the IFC is fatally flawed from both a policy and process standpoint and that it must be rescinded. However, to assist CMS as it considers reform approaches, below we have briefly outlined some of our major concerns with the MFN Model:

  • MFN Does Not Target High Drug Costs: As previously stated, the MFN fails to target manufacturer prices, instead tying hospital reimbursement to the costs paid by comparable foreign countries for the same drugs. In practice, this approach, even with the proposed add-on payment, significantly reduces hospital reimbursement for Part B drugs. CMS acknowledges as much, suggesting that hospitals and health systems could simply negotiate lower manufacturer prices to blunt the impact of the cuts. Realistically, even assuming manufacturers allowed renegotiation of contracts (which is unlikely), it would be nearly impossible for hospitals to secure reductions below 65% of average sales price for every drug included in the MFN. Further, the IFC was slated to go into effect on January 1, 2021, which left no meaningful negotiation timeframe anyway.

The MFN’s cuts to Part B will translate to reduced services, reduced patient access, and, potentially, reduced care quality. The end result is that hospitals and health systems, and consequently their patients, are punished for high drug costs. The MFN’s approach ignores the underlying reason for lower foreign drug costs – that those countries directly negotiate drug prices with manufacturers. Even if the MFN were implemented, it would likely be a temporary bandaid at best – CMS further acknowledges in the IFC that manufacturers could game the system by increasing prices in other countries or increasing Medicare Advantage and commercial prices to inflate their average sales prices (ASP).

  • MFN Harms Patient Access: By CMS’s own admission, the MFN will significantly curtail patient access to medications. In Table 11 of the IFC, CMS states that 9% of MFN savings in the first year will be attributable to patients losing access to medications. That percentage is projected to grow in subsequent years. The reduction of drug prices cannot come at the expense of patient care. It is unconscionable, particularly during an ongoing public health emergency, to trade actual patient care quality and access for speculative and relatively small cost savings. In short, the MFN is a blunt instrument where a scalpel is required – future models must be tailored to target drug prices without causing collateral damage to patients and their providers.

  • MFN Lack Specificity in Numerous Areas: Considering that the MFN is meant to upend the established reimbursement mechanisms for separately-payable Part B drugs, it lacks detail in a number of key areas. For instance, it assumes that providers would be able to determine MFN payment amounts, even though CMS purchased proprietary data from IQVIA and did not even list the countries included in the MFN calculations. Similarly, the MFN notes that “shortages of high cost single source drugs and biologicals are uncommon, of short duration, and generally apply to some but not all package sizes of a drug” and states that drugs in shortage will be excluded from MFN. However, CMS fails to provide a process for identifying and excluding drugs in shortage beyond having them appear on a quarterly exceptions report. Hospitals, health systems, and other providers are rightfully skeptical of MFN (or any other model) that lacks the baseline detail and transparency necessary to test and implement its assumptions and methodology.

Thank you for your consideration of our comments. We continue to share CMS’s goal of reducing high drug prices, and we stand ready to assist the agency in any way possible. Please do not hesitate to contact me at 301-664-8698 or [email protected] if ASHP can provide any further information.



Jillanne Schulte Wall, J.D.
Senior Director, Health & Regulatory Policy

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