PhRMA comments to administration on International Pricing Index Model

Nicole Longo
Nicole Longo January 3, 2019


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As 2018 came to a close, PhRMA submitted comments on the administration’s proposed International Pricing Index (IPI) Model for Medicare Part B medicines. The comments highlighted concerns and encouraged the administration to abandon the model altogether. In case you missed it, here are a few key excerpts:

  • Undercuts Market-Based Part B Program: “Under the IPI Model, CMS would rely on prices set by countries that artificially suppress reimbursement rates for medicines, including physician-administered drugs. … In many countries, including the 14 listed in the ANPRM, governments are the primary or only payer of health care and medicines and effectively dictate prices as a condition of market access. … Foreign governments employ a range of regulatory measures, which are often layered to exert maximum pressure on prices. … [T]hese types of price control policies should be avoided in the United States because they reduce incentives for research and development, can undermine intellectual property protections, and harm patient access to clinically beneficial treatment options.”
  • Puts Patient Access at Risk: “The U.S. leads the world in medicine access because of our market-based system. In other countries, government bureaucracies not only set prices but the government, or government-led entities, often decide who gets access to new medicines and who does not. … In marked contrast to the current standard of coverage for Part B beneficiaries, just half (51 percent) of new Part B medicines launched since 2011 are available in the 14 countries listed in the ANPRM, arriving 18 months later, on average.”
  • Chills Continued Biomedical Progress: “The substantial, negative impact that the IPI Model could have on R&D was borne out in a survey of PhRMA members completed in December 2018. More than three quarters of respondents (77 percent) stated that if the IPI Model were to go into effect, it would affect their ability to pursue current or future research and development projects. In addition, nearly three quarters (73 percent) of companies saw risk of ‘significant’ reductions in R&D investments into medicines likely covered under Part B. … Many companies also predicted negative downstream economic effects, with 45 percent expressing concern about near-term job cuts or the eventual closure of facilities.”
  • Disrupts Care for Providers and Their Patients: “Reductions in reimbursement, such as those that would occur under the IPI Model, disproportionately impact smaller rural and community practices. Community physicians are already at a significant competitive disadvantage compared to hospitals, due to significant differences in the payments they receive from commercial insurers and differences in acquisition costs for medicines (e.g. because of the 340B program). For these reasons, community practices often cannot afford to stay in business and are then frequently acquired by hospitals. This consolidation leads to increased market power, which allows hospitals to charge more for the same care, driving up costs for patients with public and private insurance.”
  • Exceeds Authority of the Center for Medicare and Medicaid Innovation: “CMS should not pursue the IPI Model because of its legal defects. … This is clear both from the CMMI statute’s text and from the principle that statutes must be interpreted to avoid raising constitutional questions, as the CMMI statute would raise serious constitutional separation of powers concerns if it allowed CMMI to cancel the Medicare statute and impose a new Part B drug pricing and distribution system based on foreign prices—which the CMMI statute plainly does not allow. In addition to the IPI Model’s failure to conform to the CMMI statute and constitutional separation of powers and foreign commerce clause requirements, the model conflicts with our U.S. patent laws. These are laws that CMMI may not waive.”

Rather than pursue this flawed model, the administration should shift its focus to market-based and value-driven reforms of Medicare Part B. PhRMA’s comments outline a number of alternatives that improve affordability while supporting patient access.

Read the full comments here.

Topics: Medicare, Part B, CMMI, International Reference Pricing