PhRMA is granted temporary injunction against favored nation rule 

Today Judge Catherine Blake of the U.S. District Court for the District of Maryland granted PhRMA and others a temporary restraining order regarding the administration's most favored nation rule that was supposed to go into effect on January 1, 2021.

The move pleased both PhRMA and the American Hospital Association. 

"Hospitals and health systems have very deep concerns about the substance and legality of this model, and the AHA filed a Declaration with this lawsuit expressing how the model could negatively impact hospitals, health systems and the patients they care for," said AHA executive vice president Tom Nickels.

WHY THIS MATTERS

Instead of holding drug companies accountable and lowering drug prices, the favored nation model slashes payments to hospitals for the drugs they purchase, the AHA said, while urging the court to reject the model as illegal and arguing for the Administration to replace it with a real effort at drug-pricing reform.

The rule would lower prescription drug costs by paying no more for Medicare Part B drugs and biologicals than the lowest price that drug manufacturers receive in other similar countries.

It would create a mandatory, seven-year payment model for the 50 highest-cost drugs and biologics in Medicare Part B. It replaces the existing reimbursement formula that adds a 6% administration fee to the average sales price of the drug with a new reimbursement system based on international pricing information from 22 different countries. 

Providers would instead be reimbursed the "most favored nation" price for the drug plus a fixed payment to cover the cost of procuring, storing, handling and administering these therapies. 

When the interim rule was released in November, the American Hospital Association said it would cut drug reimbursement to hospitals by an average of 65% when fully phased in. 

Other provider groups such as the American College of Rheumatology have also come out against the rule.

THE LARGER TREND

The Pharmaceutical Research and Manufacturers of America, the Association of Community Cancer Centers, the Global Colon Cancer Association and the National Infusion Center Association filed the motion for a temporary restraining order and preliminary injunction with an accompanying memorandum of law on December 10.

This followed a lawsuit filed by the same groups on December 4.

The complaint's allegations center on three key areas: The administration has exceeded the authority granted to the Center for Medicare and Medicaid Innovation under the Affordable Care Act; the administration has violated the U.S. Constitution by using a regulatory process to rewrite the Medicare statute and transform the reimbursement system for physician-administered medicines in the United States; and the administration has failed to demonstrate the "good cause" required for the interim final rule to skip important notice and comment procedures that allow the American public to weigh in on regulations.

The most favored national model interim final rule was finalized using an abbreviated regulatory process.

The plaintiff organizations want the rule to be declared unconstitutional and invalid. 

ON THE RECORD

PhRMA executive vice president and general counsel James C. Stansel said, "We welcome Judge Blake's ruling in favor of a temporary restraining order regarding the Most Favored Nation Interim Final Rule. As the lawsuit continues, we continue to have grave concerns with this policy and the negative consequences it will have on America's patients, providers and future medical innovation."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com