On Nov. 20, the U.S. Department of Health and Human Services (HHS) announced a new payment model – known as the Most Favored Nation (MFN) Model – intended to lower Part B drug costs for Medicare beneficiaries and address the disparity of drug costs between the U.S. and other countries.

In the new model, Medicare will not pay more than the lowest price for high-cost Medicare Part B drugs and biologicals, adjusted for purchasing power, that drug manufacturers receive in any country in the Organisation for Economic Co-operation and Development that has a gross domestic product (GDP) per capita that is at least 60% of the U.S. GDP per capita.

It will also pay providers a flat add-on amount for each dose of an MFN drug, instead of a percentage of each drug's cost. The MFN Model will only require participation of Medicare providers and suppliers that receive separate Medicare Part B fee-for-service payment for the model's included drugs, with certain exceptions. The model will operate for seven years, from Jan. 1, 2021, to Dec. 31, 2027. Learn more in the interim final rule and a fact sheet.

ACC Advocacy staff are in the process of reviewing the implications of this model to determine potential response. Read the College's health care policy principles on drug pricing and access here.

Keywords: ACC Advocacy, Drug Costs, Gross Domestic Product, Medicare Part B, United States Dept. of Health and Human Services

< Back to Listings