More Wrong Solutions to Lower Drug Prices
I’ve talked about why importing foreign drug prices is the wrong answer to lowering prices here at home, and now I’m asking CMS to rethink its latest attempt to get around congressional authority and impose foreign price controls. While I’ve asked you to contact your lawmakers to tell them where you stand on important healthcare issues, I also try to do my part by telling the Centers for Medicare & Medicaid Services (CMS) how I and, more importantly, you feel about their proposed solutions. The most recent is another attempt at implementing the Most Favored Nation (MFN) pricing approach.
The MFN concept is an effort to control the prices of prescription drugs in the U.S. and was originally proposed during President Trump’s first term. It was a fairness fix to the statement that Americans shouldn’t pay more for medicines than those in foreign countries. While the fact remains that we shouldn’t have to bear the cost of research and development for the whole world, the MFN approach and the recently proposed models will not help and, in some cases, have a negative effect on both price and accessibility.
CMS is proposing two “model” projects, the Global Benchmark for Efficient Drug Pricing (GLOBE) and the Guarding U.S. Medicare Against Rising Drug Costs (GUARD). They are the latest approach to circumnavigating congressional oversight and would further insert the government into our healthcare. Prior to these models, the Administration released an executive directive that stated that MFN controls should be included in Federal policy, finalized private agreements with drug manufacturers, and built a direct-to-consumer drug purchasing channel. All of these approaches are without congressional oversight, and we just don’t know what the final impact on patient’s out-of-pocket costs will be or whether they will even save Medicare money.
In response, SSO submitted comment letters on GLOBE and GUARD, to CMS to outline how these proposed rules will impact innovation and access with no clear pathway to lower prices for patients. These letters outline concerns with both models and echo feedback from seniors in our latest Senior Satisfaction Survey about government intervention in healthcare.
There are three aspects of these proposed models that deserve more discussion.
They would mandate manufacturer participation, apply to approximately 25% of Medicare beneficiaries, and rely on prices derived from selected foreign countries. The models offer no meaningful appeal process for manufacturers and include the possibility of future expansion. All this does is expand on the Inflation Reduction Act’s (IRA) price fixing powers without the requirement to be supported by Congress. I cannot fathom how this will achieve the stated goals, and I fully expect that these proposals will be challenged in the courts. Additionally, the models are slated to start in 2027 and go through 2031, which given the lack of legislative approval, basically assures that any change in the balance of power in Washington will lead to changes in the models.
Another aspect of these models that deserves discussion is the challenge of price transparency. If enacted, how do we truly determine what the real price of a medicine is in the selected foreign countries? Those prices are comprised of many levels of non-transparent rebates, claw backs and special arrangements. They reflect the countries’ rationing, prioritization, budgeting, and cost caps. In essence, it is just outsourcing our nation’s pricing responsibility to a foreign country with all their perverted incentives.
Finally, there are also broader ethical concerns. Many foreign health systems use Quality-Adjusted Life Year (QALY) to decide who gets access to care. This algorithm simply puts a value on the average number of years you have left and what the quality of those years would be, using questionable guidelines and definitions. You can see that the quality assigned to a year of an older or disabled person’s life could be a lower value, causing healthcare resources to be directed elsewhere.
For these reasons, our organization submitted formal comments to CMS expressing concerns about the GLOBE and GUARD models. The programs are flawed in their design, and the forced participation approach is a government intrusion that is unwanted by the very patients they are sworn to serve. Don’t hesitate to tell your lawmakers how you feel.
Best, Thair