What is the Most Favored Nation Model and Why is It Such a Problem?

In November 2020, Medicare finalized a mandatory, seven-year policy to test the Most Favored Nation (MFN) payment model. The MFN policy goes into effect on January 1, 2021 and will be applied to 50 of the highest cost Part B physician-administered drugs. MFN calculates the price of these particular Part B drugs and biologics in 22 foreign countries and requires Medicare to pay no more than that, even when the physician is not able to acquire the drug for that price. The MFN policy requires the physician to take a payment that is below cost, shift the patient to a less expensive, less effective, alternate therapy or stop treating the patient altogether.

The Part B drugs that are subject to the MFN policy treat complex, and potentially life-threatening conditions including cancers, blood disorders, autoimmune diseases, and rare diseases. In fact, 38 of the 50 drugs the MFN policy applies to are therapies prescribed by oncologists and hematologists for treatment of cancer and blood disorders.

Medicare’s actuaries have estimated that in the first year, 9% of Medicare patients will not have access to the first-line medication prescribed by their physician. By the third year of the policy, nearly 1 in 5 beneficiaries (19%) will not be able to obtain the medication that their physician prescribed to treat them and instead have to accept an inferior, alternate treatment. Join with P+P to let Congress know that medical decisions should be based on outcomes, not cost controls!