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After years of making little headway on drug prices, the Trump Administration has released a much-anticipated (and perhaps soon to be legally contested?) interim final rule that will base Medicare's payment for some drugs covered by Part B on lower prices paid by other countries.
The 'most favored nation' model is a mandatory Innovation Center demo to last for 7 years (unlike the more typical 5 year timeframe). The model will test whether lowering Medicare payment for some Part B drugs will lower spending without adversely impacting quality of care.
The Administration is also moving forward with a final rule banning rebates in Medicare Part D (technically, removing the safe harbor). On Part D rebates, there aren't major changes between proposed & final rules, except implementation in 2022, not 2020. https://www.hhs.gov/sites/default/files/rebate-rule-discount-and-pbm-service-fee-final-rule.pdf
This makes it all the more noteworthy that Secretary Azar has confirmed that the rebate rule will not increase federal spending or beneficiary premiums (which the EO required him to certify). OACT estimated a ~$200 billion spending increase over 10 years. https://www.hhs.gov/about/news/2020/11/20/secretary-azar-confirmation-in-response-to-executive-order-on-lowering-prices-for-patients.html
With such a wide range in expected effects on federal spending, beneficiary premiums and out-of-pocket costs, as modeled by the government's own actuaries and others, it seems difficult to be certain that the rebate rule won't increase federal spending. But
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If these rules don't get hung up in court (a big if), it will be interesting to see how the Biden Administration handles them. While lowering Rx costs is a stated priority for Biden, these approaches might not be exactly what he had in mind.
One final thought: whatever happened to the $200 drug discount card? (I shouldn't jinx it. This is enough action on the drug policy front for one Friday afternoon.)
