Horizon Therapeutics Issues Public Comment on Centers for Medicare & Medicaid Services Rule

WASHINGTON, Feb. 2 -- Brian Beeler, executive vice president and general counsel at Horizon Therapeutics PLC, Lake Forest, Illinois, has issued a public comment on the Centers for Medicare and Medicaid Services rule entitled "Most Favored Nation Model". The comment was written on Jan. 26, 2021, and posted on Feb. 1, 2021:

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Horizon Therapeutics plc (Horizon or "the Company") is pleased to submit comments to the Centers for Medicare and Medicaid Services (CMS or "the Agency") on the "Most Favored Nations (MFN) Model Interim Final Rule with Comment Period (IFC)."/1

Horizon is a leading biotechnology company focused on researching, developing and commercializing medicines that address critical needs for people impacted by rare and rheumatic diseases. Horizon respectfully requests that CMS not move forward with the MFN Model/2 or any similar international price-referencing model that employs reference pricing, a price control that limits patient access to medicines and is based on the foreign use of value measures that have been found to be discriminatory and are prohibited in the United States (U.S.).

Our comments can be summarized as follows:

* The MFN model uses international reference pricing to set reimbursement rates for medicines covered by Medicare Part B. Horizon opposes the use of international reference pricing to set prices or reimbursement. A growing body of research shows that the use of international reference pricing stifles innovation and diminishes access to medicines.

* International reference pricing as used by the MFN model, bases prices and reimbursement in the U.S. on prices used by foreign countries. Many of these countries use quality adjusted life years (QALYs) to set those prices. The use of QALYs has been explicitly rejected by the U.S. because of concerns that QALYs undervalue treatments for disabled and elderly patients.

I. THE MFN MODEL WOULD HAVE A DEVASTATING IMPACT ON INNOVATION AND ACCESS IN THE UNITED STATES

The MFN Model tests the use of a price control called international, or external, reference pricing to set reimbursement rates for certain medicines covered by Medicare Part B. For 50 Part B medicines, the MFN model would establish a new payment methodology, referred to as the "MFN Drug Payment Amount," instead of using the congressionally mandated average sales price (ASP) methodology. The MFN Drug Payment Amount is derived from the lowest price available in twenty-two countries./3

International reference pricing is often used by foreign governments to arbitrarily set prices for drugs and as a result, patients in those countries have less access to innovative medicines than patients in the U.S.

Since 2011, 90 percent of all newly launched medicines were availed to U.S. patients. In that same time, only two-thirds were available in the United Kingdom (U.K.), one half in Canada, and one third in Australia, all of which are countries that impose international reference pricing, or policies similar to international reference pricing./4

Additionally, a 2018 study from IHS Markit found that if the use of price controls like international reference pricing were implemented in the U.S., Americans with non-small cell lung cancer would have lost half of the survival gains attributed to access to innovative medicines. Americans with non-small cell lung cancer had access to 50 percent more medicines than patients in the examined countries, a year and a half earlier./5

The White House Council of Economic Advisors (CEA) has stated multiple times that the use of international reference pricing will harm innovation and access in the U.S. In a report from October of 2018 reviewing research on the impact of price controls on medical innovation, CEA stated that policies that "entail the same experience with below-market prices as other countries with socialized medicine...would reduce the world market size and thereby medical innovation, and ultimately mean that future patients would forgo the health gains that would have come from these forgone innovations."/6

A December 2019 CEA analysis of a similar international reference pricing proposal found that it would lead to as many as 100 fewer medicines in America over the next decade./7

In a recent presentation at International Society for Pharmacoeconomics and Outcomes Research (ISPOR) a group of panelists from universities and research institutions around the world stated that the use of international reference pricing in foreign countries has led to fewer innovative drugs available globally./8

Panelists agreed that reference pricing stifles innovation and creates access issues for patients./9

Physicians working in foreign countries that implement price controls also agree that those price controls limit access to new drugs for patients.

In a survey of physicians in the U.K., 82 percent agreed that "their patients would benefit from access to more innovative medicines."/10

According to the survey, the restrictive policies imposed in the U.K. led to over 50 percent of patients seeking treatment in other countries./11

Providers in the U.S. also agree that these polices would restrict access to drugs. In a survey of physicians about the impact of a similar reference pricing proposal for Part B drugs, the International Pricing Index (IPI) model,/12 providers agreed that IPI would cause access issues for patients in the U.S. Thirty percent of providers said that they would likely stop prescribing Part B medicines altogether under that proposal./13

When discussing savings from the MFN model, CMS itself notes that "a portion of the savings is attributable to beneficiaries not accessing their drugs through the Medicare benefit, along with the associated lost utilization."/14

For these reasons, Horizon opposes the use of international reference pricing in the U.S. and Medicare.

II. INTERNATIONAL REFERENCE PRICING IMPORTS THE USE OF QALYS FROM FOREIGN COUNTRIES

The QALY is a metric used to determine the value of a health outcome that is often employed by other countries when setting prices for drugs. The QALY was developed to attempt to assign a single number to the combined value of length and quality of life, but has been "criticized on technical and ethical grounds."/15

QALYs are frequently criticized because they have been shown to discriminate against patients with disabilities by not taking into account quality of life increases that medicines provide to these patients. A report from the National Council on Disability (NCD) found sufficient evidence of the discriminatory effects of QALYs to warrant concern, including: concerns raised by bioethicists, patient rights groups, and disability rights advocates; and the inability of patients to obtain coverage of needed health care in countries where QALYs are used frequently./16

NCD also found that when Oregon attempted to apply QALYs to its Medicaid state plan in the 1990s, it was found to violate the Americans with Disabilities Act as inherently discriminatory. A statement from the NCD on the IPI policy says "[t]o date, QALYs have been deemed contrary to U.S. public policy because of the discriminatory design and impact on people with chronic illnesses and disabilities." The use of QALYs has specifically been rejected as an appropriate measure in federal health programs.

By law, the Secretary of Health and Human Services (HHS) may not use comparative clinical effectiveness to make determinations about coverage "in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill."/17

The Affordable Care Act (ACA) included similar language in establishing the Patient-Centered Outcomes Research Institute (PCORI). PCORI "shall not develop or employ a dollars-per-quality adjusted life year (or similar measure that discounts the value of a life because of an individual's disability) as a threshold to establish what type of health care is cost-effective or recommended. The Secretary shall not utilize such an adjusted life year (or such a similar measure) as a threshold to determine coverage, reimbursement, or incentive programs under subchapter XVIII."/18

The MFN model subverts the law by importing the use of QALYs into Medicare Part B by referencing countries that use QALYs to set prices. In the 2020 Presidential Candidate Questionnaire, President Biden stated, "I will ensure people with disabilities are not denied coverage based on the use of QALY and related enterprises in making coverage and payment determinations in public programs." We support this statement from President Biden and look forward to the opportunity to work with CMS and the Biden Administration on solutions that do not put patient access at risk or import policies that discriminate against patients with disabilities.

Horizon appreciates CMS's consideration of these comments and respectfully requests that CMS not move forward with the MFN Model or any similar reference pricing model. If it would be helpful, we would be pleased to discuss our comments with you. Please do not hesitate to contact Katie Verb, director, health and reimbursement policy at [email protected], if you have any questions.

Sincerely,

Brian Beeler

Executive Vice President, General Counsel

Horizon Therapeutics plc

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Footnotes:

1/ Centers for Medicare & Medicaid Services (CMS). Most Favored Nations Model. 85 Fed. Reg. 76,180 (Nov. 27, 2020).

2/ The IFC has been vacated in its entirety pending completion of the notice and comment rulemaking process required under the Administrative Procedures Act. Biotechnology Innovation Organization v. Azar, No. 20-cv-08603 (N.D. Cal. Dec. 28, 2020) (order granting preliminary injunction).

3/ Id.

4/ "Setting the record on international reference pricing," PhRMA. July 2019. Available at: https://catalyst.phrma.org/setting-the-record-straight-on-international-reference-pricing

5/ Lockwood C and Su W. Population health outcomes of American patients under different drug access conditions. IHS Markit. December 28, 2018. https://ihsmarkit.com/research-analysis/population-health-outcomes-americanpatients.html

6/ Council of Economic Advisers. "The Opportunity Cost of Socialism." October 2019. https://www.whitehouse.gov/briefings-statements/cea-report-opportunity-costs-socialism/

7/ Council of Economic Advisers. "House Drug Pricing Bill Could Keep 100 Lifesaving Drugs from American Patients." December 2, 2019. https://www.whitehouse.gov/articles/house-drug-pricing-bill-keep-100-lifesaving-drugsamericanpatients/#:~:text=CEA%20also%20estimates%20that%20by%20limiting%20access%20to%20lifesaving%20drugs%2C% 20H.R.&text=CBO's%20assessment%20suggests%20that%20H.R.,negative%20effects%20on%20drug%20innovation. Accessed December 1, 2020.

8/ "International Reference Pricing: U.S. vs. Rest of the World - Who is Shooting Whose Foot?" ISPOR. May 18, 2020. https://www.ispor.org/docs/defaultsource/intl2020/200518irpisporpanelirpusvsrowwhoshootswhosefoot2slides.pdf?sfvrsn=e74926f0_0

9/ Hagen T. "International Reference Pricing Gets Thumbs-Down From ISPOR Panel." May 18, 2020. https://www.centerforbiosimilars.com/view/international-reference-pricing-gets-thumbs-down-from-ispor-panel.(Accessed January 22, 2021)

10/ Part B Access for Seniors and Physicians Coalition. "Survey of U.K. Physicians Reveals Concerns with Government Interference in Health Care." July 2020. https://partbaccess.org/wp-content/uploads/2020/07/PartBAccess_Surveyof-U.K.-Physicians-Reveals-Concerns-with-Government-Interference-in-Healthcare.pdf. Accessed December 1, 2010.

11/ Id.

12/ Centers for Medicare & Medicaid Services, International Pricing Index Model for Medicare Part B Drugs, 83 Fed. Reg. 54,546 (Oct. 30, 2018).

13/ Academy of Physicians in Clinical Research. "Impact of CMS Proposed International Pricing Index Reform on Patient Access." April 2019. https://apcrnet.org/getattachment/702a69b5-6e20-408c-9080-0bd4ae5a1911/Survey.jpg.aspx. Accessed December 1, 2020.

14/ 85 Fed. Reg. at 76,237.

15/ Prieto L, Sacristan JA. Problems and solutions in calculating quality-adjusted life years (QALYs). Health Qual Life Outcomes. 2003;1:80. Published 2003 Dec 19. doi:10.1186/1477-7525-1-80.

16/ "Quality-Adjusted Life Years and the Devaluation of Life with Disability," National Council on Disability. November 6, 2019. Available at: https://ncd.gov/sites/default/files/NCD_Quality_Adjusted_Life_Report_508.pdf.

17/ 42 U.S.C. Sec. 1320e-1(c)(1).

18/ 42 U.S.C. Sec. 1320e-1(e).

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The rule can be viewed at: https://www.regulations.gov/document?D=CMS-2018-0132-2750

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