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Association Comments on International Pricing Index Model

In a Dec. 21 letter to the Centers for Medicare & Medicaid Services (CMS), America’s Essential Hospitals urged the agency to consider the interplay of new policies with existing government programs, such as the 340B Drug Pricing Program, when developing new strategies to lower drug prices.

The letter responded to an advance notice of proposed rulemaking (ANPRM) on a new international pricing index (IPI) model for Medicare Part B drugs. The five-year demonstration would designate vendors to negotiate with manufacturers, purchase Medicare Part B drugs, and distribute drugs to physicians and hospitals. Providers would receive drugs from these vendors, who then would bill Medicare for the drugs.

CMS would pay vendors for the included Part B drugs based on a phased-in target price determined with an international price index. The target price would be calculated using the average international price for each Part B drug based on drug pricing data from 14 countries.

In its comments, America’s Essential Hospitals encouraged the agency to:

  • preserve the 340B program by reconsidering the proposal to place purchasing power in the hands of vendors, which would remove the ability of providers to purchase Medicare Part B drugs at 340B prices; and
  • consider how provider-vendor arrangements could conflict with the group purchasing organization prohibition for 340B hospitals.

The letter also notes that the IPI model could change manufacturer drug prices, affecting 340B ceiling prices and possibly altering 340B discounts. The model also would be burdensome on providers’ drug purchasing and inventory management practices.

The advance notice is an early step in the rulemaking process. If CMS decides to proceed with the model, proposed and final regulations would follow later this year.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Rachel Schwartz is a former policy associate at America's Essential Hospitals.

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