Feds roll out new structure for Medicare drugs

President Donald Trump and the U.S. Department of Health and Human Services announced a new drug payment model Friday that will significantly lower the cost of Medicare Part B drugs, in a move the president said was a threat to “Big Pharma.”
The Most Favored Nation Model will test an innovative way for Medicare to no longer pay high-cost, physician-administered Medicare Part B drugs than the lowest price charged in similar countries.
Following the president’s recent Executive Orders to lower drug prices and improve access to life-saving medications, the MFN Model will protect current beneficiary access to Medicare Part B drugs, make them more affordable, and address the disparity of drug costs between the U.S. and other countries, Trump said at a White House news conference at the White House.
The program is being administered through the Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services and is estimated to save American taxpayers and beneficiaries more than $85 billion over seven years.
The model “will be the most significant single action any administration has ever taken to lower American drug costs,” HHS Secretary AJ Azar said.
CMS Administrator Seema Verma said the president was taking on “the entrenched special interests that have stymied patient-centered reforms in Washington for generations” and that the new model will protect seniors, not the middle men.
“The current system creates incentives for drug manufacturers to price Medicare Part B drugs as high as they can in the U.S. system because the program pays doctors more when they prescribe more expensive drugs, even when a lower cost, clinically-equivalent alternative is available,” Varma said. “The Most Favored Nation Model will lead to lower drug prices for seniors.”
She also noted that premiums are down in Medicare Part B from 34 to 60 percent. In the last three years, the Trump administration has lowered premiums across the board on the exchange, increased price transparency, enabled portable digital records, reduced regulatory burdens, and afforded more options for patients, she said.
As of November 2020, patients have more than 1,600 plans offering insulin at 66 percent less the cost than they did three years ago, she said.
Historically, Part B costs resulted in taxpayers paying “whatever drug companies wanted to charge,” Varma said. “It’s no wonder that American seniors are paying twice as much as seniors in other countries are paying.”