Johnson & Johnson Issues Public Comment on Centers for Medicare & Medicaid Services Rule

WASHINGTON, Feb. 2 -- Jacqueline Roche, senior director for worldwide government affairs and policy at Johnson & Johnson, 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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Johnson & Johnson ("J&J") is responding to the Most Favored Nation Model (hereafter, referred to as the "MFN"), interim final rule with comment period (IFC) published in the Federal Register on November 27, 2020/1 with our request for an immediate termination of the rule.

At J&J we are committed to assuring Medicare beneficiaries receive high quality, high value health care; our concern is that the poorly conceived MFN fails to deliver either. As we embark on a 2021 health policy agenda focused on responding to the ongoing COVID 19 global health pandemic and advancing a more equitable 21st century U.S. health care system, we look forward to engagement with the Biden Administration to pursue alternative policy solutions designed to improve healthcare outcomes for all beneficiaries served by HHS' programs.

At J&J, we strongly support access to affordable, high quality care for Medicare beneficiaries while also sustaining investment for future therapies. In our intensely focused pursuit of innovation, the Janssen Pharmaceutical Companies of J&J have consistently made significant investment in the research and development of novel medicines for patients with serious, unmet medical needs served by the Medicare program. This research and development (R&D) infrastructure provides J&J with the agility to meet current and emergent healthcare crises, such as the unprecedented response to the COVID-19 global pandemic. Janssen currently manufacturers 16 medicines covered by Medicare Part B. DepuySynthes, a J&J Medical Devices Company, manufactures Orthovisc(R), a product also covered under Medicare Part B as a drug.

In our annual Janssen U.S. Transparency Report, we offer information about our responsible business practices that put patients first, including our approaches to investing our resources and pricing our medicines. In 2019 (the year covered by our most recent Report), we continued our significant investment in discovering and developing transformational medicines for patients facing some of the world's most challenging diseases. Our $8.8 billion global investment in R&D was 91 percent more than what we spent on global sales and marketing for our medicines, and over the last five years, we invested $39.4 billion in R&D, leading to significant medical progress for patients.

Our responsible approach to pricing our medicines, including those reimbursed under Medicare Part B, balances their value to patients, the healthcare system and society; the importance of ensuring affordable access to medicines for people who need them; and the preservation of our ability to develop future groundbreaking treatments. In 2019 the net price of our medicines in the US declined 1.2 percent, while between 2016-2019 the net prices of medicines across Janssen's portfolio declined, on average, 9.2 percent.

It is worth noting that these drops - and the declining net prices of brand-name medicines industrywide/2 - are due largely to the same competitive market dynamics that underpin Medicare's existing reimbursement policies for Medicare Part B.

The MFN represents a sweeping overhaul of Medicare payment policy for Part B medicines. If implemented as a mandatory, nationwide, Medicare payment "demonstration" under the Center for Medicare & Medicaid Innovation (CMMI), the MFN would mandate drastic cuts to physician payments for drugs that treat Medicare patients' most complex conditions.

The MFN purports to test whether aligning payment for certain Medicare Part B drugs and biologicals (hereafter, referred to as "drugs" or "medicines") with the lowest prices paid in certain OECD countries, and removing perceived incentives for providers to prescribe higher-cost drugs, will reduce growth in Medicare Part B spending without adversely affecting quality of care for beneficiaries.

With limited exception, reimbursement for initially fifty drugs is based on the lowest paid price among a selected set of countries and not via the average sales price (ASP) methodology required by Congress. While the CMS notes significant uncertainty with their methods, the MFN is estimated to result in savings of $85.5 billion, with a notable percent of this savings resulting from reduced access for beneficiaries./3

We object to the MFN on both substantive and procedural grounds. A policy change of this magnitude, described as a "test", that does not follow legally required procedural process has reckless consequences. The MFN will reduce the accessibility of life-saving drugs for Medicare beneficiaries, many who suffer from cancer, autoimmune diseases, or other rare conditions.

The MFN will also cause an immediate hardship to doctors and hospitals at a time where there is limited capacity to absorb additional financial upheaval and added administrative burden as our nation's providers continue to battle the COVID-19 pandemic. With the potential to remove nearly $490 billion in revenue from the biopharmaceutical industry over the course of the demonstration, the MFN also presents a severe threat to the United States' global leadership role in biopharmaceutical innovation./4

At J&J we believe it is possible to improve access to and quality of care for beneficiaries while also making the Medicare program more efficient on behalf of taxpayers and sustaining investment in innovation for tomorrow's cures.

Given the potential for severely negative consequences for patient outcomes and on future innovation, we offer our strongest recommendation that HHS permanently abandon the ill-conceived MFN IFC. Adoption of future payment reform policies must promote access to life-saving innovations and build from the existing strengths of the Medicare program.

J&J is a member of the Pharmaceutical Research and Manufactures Association of America (PhRMA) and the Biotechnology Innovation Organization (BIO). We support and endorse their comments in response to this IFC.

View full comment at: https://www.regulations.gov/contentStreamer?documentId=CMS-2018-0132-3833&attachmentNumber=1&contentType=pdf

Sincerely,

Jacqueline Roche

Senior Director

Worldwide Government Affairs & Policy

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Footnotes:

1/ 85 Fed. Reg. No. 229. November 27, 2020.

2/ https://www.drugchannels.net/2021/01/surprise-brand-name-drug-prices-fell.html

3/ Fed Reg 85 76181

4/ https://phrma.org/-/media/Project/PhRMA/PhRMA-Org/PhRMA-Org/PDF/D-F/EHP-MFN-Estimates-01-142021.pdf

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

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