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Starting on January 1st 2021, CMS will be rolling out their new reimbursement model for 50 key drugs

CMS will be rolling out their new reimbursement model for 50 key drugs: the “Most Favored Nation (MFN) Model”. With this new model, CMS is revamping their formula to calculate reimbursement rates in order to lower prescription drug costs nationwide. Prior to this, drugs were reimbursed using the US average sale price plus a 6% add on payment. Moving forward, these drugs will be reimbursed using a combination of US average sales price and the lowest price that drug manufacturers receive in similar countries (similar countries being defined as countries member in the Organization for Economic Co-operation and Development with a GDP per capita > 60% of the US). Every year for 4 years, CMS will decrease the weight of US average sales price and increase the weight of drug prices by similar countries, so that by 2024 US average sales price would not be factored in anymore. This new model also includes a flat add-on payment of $148.73 per dose administered. However, in order to guarantee a reduction in spending, rates based on the MFN model are capped so they never exceed reimbursement from the traditional average sales price methodology. You can find CMS's fact sheet regarding the Most Favored Nation model here.

cms.gov FACT SHEET: Most Favored Nation Model for Medicare Part B Drugs and Biologicals Interim Final Rule with Comment Period | CMS The Centers for Medicare & Medicaid Services (CMS) is announcing a new payment model, the Most Favored Nation (MFN) Model (or the “MFN Model”), and issuing a corresponding Interim Final Rule with Comment Period (IFC). The MFN Model will lower prescription drug costs by paying no more for high-cost Medicare Part B drugs and biologicals (hereinafter called “drugs”) than the lowest price that drug manufacturers receive in other similar countries.

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