Two US states block Trump administration's MFN drug pricing rule

Two US district courts – Maryland and the Northern District of California - recently dealt what may become fatal blows to the Trump administration’s Most Favored Nation (MFN) rule for Medicare Part B drug payment on procedural grounds, according to a posting on Hyman, Phelps & McNamara’s (HP&M) FDA Law Blog.

As noted in a summary (available  here), the MFN rule was published as an interim final rule with comment period rather than a proposed rule, leaving it vulnerable to an Administrative Procedure Act (APA) challenge. Multiple organizations, including the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO), filed lawsuits challenging the controversial drug price reduction initiative that was scheduled to take effect on January 1, 2021.

The government’s assertions that the COVID-19 pandemic’s recent surge was increasing the financial burden on Medicare beneficiaries failed to convince either court that a good cause exception to the APA should apply. The courts also found that the $5 billion reduction in Medicare Part B reimbursements in the first year alone, as estimated by the government, would drastically reduce revenues for providers and could qualify as irreparable harm.