In addition to back-to-back winter storms predicted for this week in Washington, D.C., President Biden issued a Memorandum on January 20, 2021 for the Heads of Executive Departments and Agencies: “Regulatory Freeze Pending Review.”
In this document, President Biden has directed Agency Directors to “pause” the implementation of pending regulations (unless emergency situations exist) to allow President Biden’s appointees to review and approve the rules. This regulatory “freeze” applies to two rules’ statuses: 1) those regulations that have been sent to the Office of the Federal Register (OFR) but have not yet been published, and 2) those regulations that have been published in the Federal Register but have not yet taken effect. Rules with statutory or judicial deadlines are not included in this freeze.
For the first group (those not yet published), the rules are immediately withdrawn from the OFR.
For the second group (those published, but not yet implemented), department heads are instructed to consider postponing the rules’ effective dates for 60 days from the date of the memorandum (to March 22) and to consider opening a 30-day comment period. In the memorandum, “rule” is interpreted broadly and includes regulatory actions, guidance documents and substantive actions that may lead to an agency statement of policy.
These five rules are drug-related rules that we anticipate will be impacted by the 60-day delay:
Implementation of Executive Order on Access to Affordable Life-Saving Medications (Display copy; scheduled to be published in Federal Register on 1/26/2021). Original Rule: December 23, 2020 Federal Register.
This EO delays the effective date from January 22, 2021 to March 22, 2021 to allow additional time for review. The Final Rule applied to Federally Qualified Health Centers (FQHC) and required them to make 340B-purchased insulin and injectable epinephrine available at or below the 340B purchase price (plus a minimal administration fee) to qualifying, low income patients.
This proposed delay of effective date and request for comments further delays the effective date from March 22, 2021 to July 20, 2021. This proposed delay was published in the Federal Register on March 11, 2021.
The Most Favored Nation Model Interim Final Rule was scheduled to be implemented on January 1, 2021, however numerous court cases have delayed its implementation. Comments are due to CMS by 5PM EST on January 26, 2021, although that deadline may be extended based upon the White House Memorandum. We expect a delayed implementation date, rule revision, or rule revocation with further notice in the Federal Register prior to March 22.
The MFN Model focuses on 50 Medicare Part B drugs that encompass a high percentage of Medicare Part B drug spending. CMS proposed paying providers such as hospitals, ambulatory surgery centers and physician offices the lowest price that drug manufacturers receive in other similar countries. In addition, providers would receive a flat add-on payment for each dose of the drug.
Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary” was published in the Federal Register on Jan 23, 2021 with an original effective date of March 15, 2021.
Although this rule pertains primarily to a new pathway for coverage of innovative medical devices, the rule also includes a definition of “reasonable and necessary” which would be applied to all items and services that are furnished under Part A and Part B, including drugs.
Update (3/17/21): This interim final rule was published in the Federal Register on March 17, 2021 and delays implementation until May 15, 2021. Comments can be submitted to CMS by April 16, 2021 as specified in the Notice.
Update (5/18/21): This interim final rule was published in the Federal Register on May 18, 2021 and delays implementation until December 15, 2021.
A review of comments received is included in this notification.
Update (9/15/21): This proposed rule would repeal the Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary” final rule, which was published on January 14, 2021, and would be effective on December 15, 2021. Comments are due to CMS by October 15, 2021.
Update (11/15/2021): This final rule repeals the Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary” final rule, which was originally published on January 14, 2021.
Fraud and Abuse; Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on Prescription Pharmaceuticals and Certain Pharmacy Benefit Managers Service Fees with an original effective date of January 29, 2021.
(Additional update: 1/29/2021- Biden administration has agreed to delay the rule’s elimination of safe harbors for drug rebates by one year to January 1, 2023 (court order))
Clarifies and amends the discount safe harbor such that rebates paid from drug manufacturers to Medicare Part D prescription drug plan sponsors or their pharmacy benefit managers (PBMs) are not protected from liability under the discount safe harbor and adds a new safe harbor for point-of-sale reductions in price that are passed on directly to a buyer and an additional safe harbor for “legitimate” service fees paid to PBMs by drug manufacturers.
Secure Electronic Prior Authorization for Medicare Part D with an original effective date of February 1, 2021.
Names a new transaction standard for Medicare Part D e-prescribing program to ensure secure electronic prior authorization request and response transmissions and requires support of version 2017071 of the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard for use in certain electronic Prior Authorization (ePA) transactions with prescribers. Required use of the standard by January 1, 2022.
In addition, two other drug-related rules have been recently implemented but had limited notice and comment periods. These rules may also come under additional scrutiny by the incoming Presidential Administration but are currently implemented:
Department of Health and Human Services Good Guidance Practices with an implementation date of January 6, 2021.
Termination of the Food and Drug Administration’s Unapproved Drugs Initiative; Request for Information Regarding Drugs Potentially Generally Recognized as Safe and Effectivewith an implementation date of December 25, 2021.
Update (5/27/2021): Federal Register notice that original notice terminating the Food and Drug Administration’s Unapproved Drugs Initiative has been rescinded. https://public-inspection.federalregister.gov/2021-11257.pdf
The Inpatient Prospective Payment System (IPPS), Outpatient Prospective Payment System (OPPS) and Physician Fee Schedule Rules have statutory deadlines and were implemented on or before January 1, 2021 so we do not expect to have changes to the rules currently in effect.
We will continue to follow these rules and implementation delays closely and provide updates when they are available.
Watch for our newsletter or subscribe to our Apple Podcast-Pharmacy Revenue Cycle News for updates to these regulations as they become available!