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Two drug-pricing models proposed by the Centers for Medicare and Medicaid Services that have the potential to harm patients and stifle innovation should be withdrawn immediately, the NAM said this week. 

What’s going on: In December, CMS released the Global Benchmark for Efficient Drug Pricing Model and the Guarding U.S. Medicare Against Rising Drug Costs Model, which would institute most-favored-nation-based drug pricing in Medicare Parts B and D, respectively. 

Exceeding authority: The models exceed the authority of the Center for Medicare and Medicaid Innovation, the NAM told CMS Administrator Mehmet Oz on Monday during a 60-day public comment period on the proposals. Section 1115A of the Social Security Act defines CMMI’s authority to implement health-care payment models, laying out requirements, including the following: 

• That they address “a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures.”  
• That they “reduce program costs . . .  while preserving or enhancing the quality of care” for beneficiaries. 

Neither model meets either requirement. 

What the models do: By “importing flawed foreign pharmaceutical prices via international reference pricing,” the NAM said, the two models could stymie the hard-fought innovation that is the hallmark of biopharmaceutical manufacturers—and hurt patients in the process. 

• Pharmaceutical companies conduct and spend the most on research and development of any industry in the private sector, and reductions in these companies’ revenue “translate[s] into reduced rates of innovative effort, which ultimately harm[s] patients . . . who would lose out on new and improved therapies that may no longer be researched and developed.”
• Foreign reference pricing also “fail[s] to properly value innovation,” as many “foreign countries restrict patient access to innovative medicines by refusing to cover certain treatments they deem too expensive, actively harming their citizens.”  

• Further, the countries referenced in the models “either directly or indirectly rely on quality-adjusted life years (QALYs) in their pricing schemes. Foreign countries use QALYs as a way to assign value to new treatments, but because QALYs assign lower numerical values to disabled or elderly patients, they can be discriminatory towards vulnerable populations while ignoring other elements that may matter to patients and caregivers.” 
• Finally, both models would disproportionately impact small and medium-sized manufacturers, the NAM said. 

What should be done: “Given the risks the proposed rule[s] could pose for manufacturers and patients, the NAM respectfully encourages CMS to reconsider and withdraw” them, NAM Vice President of Domestic Policy Jake Kuhns and NAM Director of Health Care Policy Jess Wysocky told Oz.