Drug Pricing Rule May Block Patient Access to Treatments and Hurt Rheumatology Practices

December 10, 2020
Amy Reyes

The American College of Rheumatology (ACR) issued a statement on Wednesday objecting to a new Centers for Medicare and Medicaid Services (CMS) drug pricing rule the Trump Administration issued in November.

The American College of Rheumatology (ACR) issued a statement on Wednesday objecting to a new Centers for Medicare and Medicaid Services (CMS) drug pricing rule the Trump Administration issued in November.

Called the “most-favored-nations rule,” the plan for the payment model, according to Politico, “would link government payments for medicines to lower prices paid abroad. It could cut Medicare drug payments by as much as 30 percent, lopping off a chunk of pharmaceutical companies' profits in one of their largest customer pools.”

ACR is concerned the rule could lead to drastic cuts to Medicare Part B therapies. “Making these kinds of cuts to reimbursements for therapies with only a month's notice and based on a pricing structure not accessible domestically is dangerous to provider solvency and patient access―especially when practices have already been struggling under the weight of a pandemic. Meanwhile, these types of efforts do little to address the root cause of high drug prices,” said Jocelyn Givens, director, of public relations and communications, in an email.

The payment model would dramatically disrupt patient access to critical rheumatic disease therapies. And, it threatens the financial solvency of many rheumatology practices―particularly those located in rural and underserved areas, including those that have been hardest hit by the COVID-19 pandemic.

“While the ACR supports efforts to rein in high drug costs, we strongly believe this policy will come at great expense to the patients we serve,” said David Karp, M.D., Ph.D., ACR president, in a written statement.

The interim final rule calls for dramatic cuts to specialty providers like rheumatologists who administer Part B drugs. The idea would be that manufacturers would take it upon themselves to lower drug prices. But, Dr. Karp, said this hasn’t worked in the past as drug prices continue to rise.

Instead of removing barriers to medications, it may have the opposite effect, Dr. Karp said. “We are concerned this model will severely restrict patient access to treatment while doing little to address the root causes of high prescription drug prices,” he said.

It is scheduled to begin in January 2021. It calls for a mandatory, seven-year payment model for the 50 highest-cost drugs and biologics in Medicare Part B. It replaces the existing reimbursement formula that adds a 6 percent administration fee to the average sale price of the drug with a new reimbursement system based on international pricing information from 22 different countries. Providers would instead be reimbursed the “most favored nation” price for the drug plus a fixed payment to cover the cost of procuring, storing, handling and administering these therapies. This is problematic, because the price of the drug internationally could be much lower than what the provider is able to purchase it at domestically.

“The new fixed payment rate will likely not be enough to cover the cost of acquiring and administering many of the therapies most frequently administered by rheumatologists, which will require practices to either operate at a loss or forgo offering the treatment altogether,” Dr. Karp said. “This will be detrimental to provider solvency and patient access to medications.”

According to estimates released with the rule, CMS expects reimbursements will be reduced by 65 percent once the model is fully implemented if manufacturers continue their current pricing structures. Further, the agency actually expects a significant portion of the projected savings from this proposal to come from patients losing access to care under this model.

“At a time when many healthcare providers have already been stretched thin due to the COVID-19 pandemic, it is dangerous for CMS to rush through a payment model that further compromises providers’ ability to offer quality rheumatology care,” Dr. Karp said. “The ACR looks forward to working collaboratively with CMS officials to implement drug pricing reforms that do not put rheumatic disease patients and the providers they depend on for care in jeopardy.”

HealthAffairs is reporting that the finalized rules may create substantial legal jeopardy and as such, it may be “invalidated on procedural grounds.”