AHA Statement on Most Favored Nation Model Interim Final Rule


Colin Milligan, (202) 638-5491
Marie Johnson, (202) 626-2351

Tom Nickels
Executive Vice President
American Hospital Association

November 20, 2020

America’s hospitals and health systems have very deep concerns about the substance and legality of today’s Most Favored Nation Model interim final rule. Instead of holding drug companies accountable for drug prices, it slashes reimbursement to hospitals for drugs. In addition to the continued concerns we have expressed about the impact this model has on the 340B drug pricing program, we strongly question whether attempting to institute such a sweeping and controversial policy in an interim final rule is legally permissible.

By cutting drug reimbursements to hospitals — by an average of 65% when fully phased in — hospitals will have to absorb losses while drug companies are free to continue their trend of charging exorbitant prices. This will put hospitals in the terrible position of having to divert resources from other patient care simply to buy the drug therapies they need for their patients.

Cutting provider payments will not encourage companies to lower their prices. Drug companies will simply continue to try to maximize their profits.

It is alarming that the Administration has issued this operationally burdensome rule after over two years, in the middle of a pandemic with cases at record levels, and with less than six weeks’ notice before the model begins. Many of our nation's hospitals are already on the brink of being overwhelmed caring for surges of COVID-19 patients. We urge the Administration to withdraw this rule immediately and replace it with a serious effort at drug pricing reform.