HHS’s Efforts to Reduce Prescription Drug Prices and Transition to Value-Based Care – Part 1: CMS and OIG Issue a Series of Final Rules

In a completely unexpected move, on November 20, 2020, the Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) Office of the Inspector General (“OIG”) published advance copies of a collection of four rules focusing on two themes: (i) reducing prescription drug prices and (ii) advancing the transition to value-based care and modernizing the regulatory framework.

This Client Alert provides a brief, high-level summary of each of the four rules and serves as the first in a series of Client Alerts. Subsequent Client Alerts will provide in-depth analyses of each of these final rules.

Reducing Prescription Drug Prices

CMS and OIG each published advance copies of rules responding to executive orders that President Trump issued in July and September 2020 to lower costs on prescription drugs. CMS’s interim final rule with comment period (“IFC”) implements a “most favored nation” (“MFN”) model that will test whether aligning the reimbursement for a cohort of Medicare Part B drugs with the prices certain other countries pay will reduce Medicare program expenditures while preserving quality of care. OIG’s final rule excludes certain reductions in price offered from pharmaceutical manufacturers to Medicare Part D plan sponsors or the pharmacy benefit managers that contract with them and promulgates two new safe harbors.

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