US courts blocks introduction of 'most favoured nation' pricing

Latest News

US-based BIO has secured a preliminary injunction blocking the adoption of the 'most favoured nation' pricing policy for a key US government prescription medicine program.

The outgoing Trump administration announced the new law as one of its final acts.

A phased implementation of the policy was planned to begin on 1 January 2021 with the introduction of a form of international reference pricing for medicines funded through the US government's Medicare Part B program.

The program funds outpatient services and the new policy covers many high-cost medicines, including cancer therapies administered intravenously.

The 'most favoured nation' model is based on a formula that phases in the lowest adjusted international price over several years.

The policy has raised significant concern in Australia over the risk of delays in access to new medicines as companies move to protect the more lucrative US market.

Some US academics have also criticised the policy as 'lazy and misguided'. A recent article published in Health Affairs said the policy means the US would price medicines based on the 'value' assessments of other countries and health systems.

The incoming Biden administration went to the November 2020 election with a proposal to allow US government prescription medicine programs to negotiate prices based on the advice of an independent expert committee.

The industry, including PhRMA and BIO, responded to the 'most favoured nation' policy by launching legal action in partnership with patient and science groups.

The groups argue the introduction of the policy has been unconstitutional. 

On 29 December 2020, a judge in the US District Court for the Northern District of California issued a preliminary injunction blocking the policy's introduction.

The injunction was in response to a challenge by BIO (Biotechnology Innovation Organization), the California Life Sciences Association (CLSA) and BIOCOM California. 

According to Dr Michelle McMurry-Heath, BIO President and CEO, “We are pleased with the court’s decision to grant a preliminary injunction on the president’s reckless scheme of foreign price controls on the very scientists working to end our current pandemic.

“Arbitrary government price-setting creates unnecessary barriers for scientists and researchers ushering in the next generation of lifesaving cures, destroys the next generation of medical innovation, and eliminates hope for Americans desperately waiting for cures and treatments.”

Mike Guerra, President and CEO of CLSA, added, “Despite repeated concerns raised by patient advocates, the life sciences industry and others, HHS [US Health and Human Services] has proceeded with a flawed MFN [most favoured nation] model via an IFR that immediately threatens innovation and patient access because of this rushed implementation date.

"The mandatory and inflexible nationwide model would 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."