International Pricing Index Model

November 20, 2020
The AAAAI is preparing comments in response to the Centers for Medicare and Medicaid Services (CMS) interim final rule that implements the Most Favored Nation (MFN) Model. The MFN Model will test whether more closely aligning payment for Medicare Part B drugs and biologicals with international prices and removing incentives to use higher-cost drugs can control unsustainable growth in Medicare Part B spending without adversely affecting quality of care for beneficiaries.

The interim final rule will:
•    Be tested in all states and U.S. territories by the CMS Innovation Center;
•    Last for 7 performance years (January 1, 2021 to December 30, 2027), plus another 2 years after conclusion for monitoring;
•    Include 50 single-source drugs and biologics (including biosimilars, but excluding generics) that encompass a high percentage of Medicare spending during year 1;
•    Require mandatory participation;
•    Phase in replacement of ASP with a drug payment derived from the lowest GDP- adjusted country-level price, based on non-U.S. OECD member countries with a GDP per capita that is at least 60 percent of the U.S. GDP per capita;

•    Replace the add-on fee with a flat fee calculated based on 6.1224% of historical applicable ASPs for 2019 final action claim lines for the selected MFN Model drugs for the beginning of performance year 1, trended forward using an inflationary adjustment for the start of performance year 1. (Note that for biosimilars, CMMI will use 6.1224% of the historical applicable ASPs for the reference product.)

•    Entail significant monitoring and oversight activities to protect beneficiary access.

Read Hart Health Strategies summary of the MFN Model.

January 3, 2019

Through a recent Advance Notice of Proposed Rulemaking (ANPRM), CMS discussed a model concept design for an “International Pricing Index Model (IPI)” that would initially focus on Part B single source drug and biologics that comprise a high percentage of Part B drug utilization and spending. Read related AAAAI comments.