CLSA Joins National Trade Partner BIO in Legal Action Challenging Most Favored Nation Interim Final Rule

CLSA issued a statement after the issuance of the Most Favored Nation (MFN) Interim Final Rule, and our subsequent legal action we have joined with our partners BIO and Biocom.  The statement is available below.  CLSA has shared the statement with the California Congressional Delegation and with the office of HHS Secretary nominee, Xavier Becerra.  If you have any questions regarding the statement, lawsuit, or CLSA’s efforts on MFN, please contact Oliver Rocroi.

California Life Sciences Association joins BIO and Biocom in opposition to Most Favored Nation pricing scheme.

California Life Sciences Association (CLSA), the trade association representing California’s life sciences industry – a sector with more than 3,700 firms employing almost 1 million Californians – issued the following statement pursuant to their legal challenge of an Interim Final Rule (IFR) establishing a “Most Favored Nation” (MFN) payment model by the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services’ (HHS).

“This IFR seeks to implement a sweeping new rule that radically alters policy established by Congress for the reimbursement of certain drugs administered by Medicare Part B providers.  It will harm America’s most vulnerable senior citizens and cause irreparable harm to the health care providers who serve this large patient population. The IFR will drastically alter a payment and reimbursement structure, in clear violation of the notice and comment requirements of the Medicare Act, while devastating the innovative life sciences ecosystem.

Despite repeated concerns raised by patient advocates, the life sciences industry and others, HHS has proceeded with a flawed MFN model via an IFR that immediately threatens innovation and patient access because of a January 1, 2021 implementation date. This mandatory and inflexible nationwide model will introduce a series of artificial price controls to reflect those of foreign “reference” nations. As a result, MFN will restrict access to medicines, stifle innovation, and disrupt the current distribution and reimbursement model established by Congress while doing little to make drugs more affordable or accessible.

In 2019, CLSA commissioned a study by international health economics experts that demonstrated the negative impacts that a similar foreign price controls policy would have on California’s biopharmaceutical ecosystem. The analysis conclusively shows that implementing foreign price controls would have resulted in an 88% reduction in the number of new medicines developed by small and emerging California-based companies in the prior decade.

While reforms are needed to ensure Americans can access high-quality, affordable health care, MFN and this IFR will result in serious availability issues for Part B beneficiaries as patients will no longer have access to the drugs in question from their providers.

American innovation leads the world – and California is at the forefront. Investment into this innovation is critical; if drug prices are set arbitrarily low, based on what is paid by governments in foreign countries who spent nothing developing these products, then the ability to attract new investment within the United States virtually disappears. This is especially true for rare diseases or diseases with smaller patient populations.

CLSA is committed to pursuing policies that deliver affordable, accessible, and innovative therapies for patients and their loved ones, and we must therefore strongly oppose this sweeping rule being forced into effect in the dark of night with little opportunity for public engagement and comment.

Price controls are penny wise and pound foolish.  Disrupting investment into innovation and discovery is like taking a giant step backwards while patients and their families desperately wait for our healthcare system to take a giant leap forward.  Shared responsibility with shared solutions is how we fix this challenge, not with a punitive knee jerk reaction in the middle of a global pandemic.”