Most Favored Nation (MFN) Model Interim Final Rule with Comment Period
Incubate writes to share our strong concerns with the interim final rule (IFR) implementing the Most Favored Nation (MFN) Model. We request the Biden Administration withdraw this rule.
01.26.2021
Electronically Submitted via Regulations.gov
Re: Most Favored Nation (MFN) Model Interim Final Rule with Comment Period (Agency/Docket Number: CMS-5528-IFC)
To Whom It May Concern:
Incubate writes to share our strong concerns with the interim final rule (IFR) implementing the Most Favored Nation (MFN) Model.1 We request the Biden Administration withdraw this rule. On behalf of the early-stage life sciences ecosystem, and specifically the venture capital community, the implementation of the MFN Model, or any reference pricing model, would be catastrophic to the future of U.S. biotechnology and biopharmaceutical companies and the millions of patients hoping for further therapeutic innovation. This rule, along with similar measures introduced in the United States Congress, shows a fundamental misunderstanding of the drug development process that has driven innovation in our country for decades. 2
Incubate previously expressed concern to both the White House and Congress, firmly stating any implementation of price controls will damage American biopharmaceutical leadership and our position as a global champion for breakthrough treatments, technologies and cures.3 Price controls will disincentivize much-needed private investment in the sector and jeopardize the entire industry’s ability to provide the patients of tomorrow with new medicines.
Reference pricing will disrupt early-stage investment and ensuing biopharmaceutical innovation. Americans, and patients from all over the world, cannot afford to lose this country’s medical contributions. If our industry is forced to base American drug prices off other countries, then early-stage investment will be hindered. Many of the referenced countries have government agencies that heavily regulate drug prices and we are concerned that with this new order, the United
States would effectively be accepting imported foreign price controls. This reality would fundamentally upend our market.
As stewards of drug discovery, we are concerned about the unintended consequences of these orders on the future of American drug innovation. Capital is the vehicle that drives innovation forward in the risky and expensive world of medicine, transforming discoveries into life-saving drugs. Under a reference pricing scheme, venture capital funding from pensions, endowments and other large pools of capital will dry up and the industry will receive less investment due to a diminished return on investment (ROI).4 Once the incentive to invest is removed from the equation, scientists and entrepreneurs will no longer have funding to pursue their discoveries, thus crippling the entire ecosystem.
In this scenario, the U.S. will fall behind in global competitiveness in the biotechnology and biopharmaceutical sectors, forfeiting its role as a champion of medical discovery. The price of drugs in Europe and other countries cannot sustain the costs of innovation, and, if implemented in the U.S., we believe that potential cures and technologies will never reach fruition.
We understand the significant need to lower patients’ out-of-pocket spending on drugs, however, tying prices for drugs to those paid by other countries is not the answer. Instead, we must find a solution for patients that continues to incentivize innovation supported by both public and private capital.
American biopharmaceutical and biotech firms face unlikely odds when developing treatments; less than 12 percent of the drugs that reach phase I clinical trials achieve regulatory approval. It is the high-risk nature of drug development that drives up the cost; requiring on average $2.6 billion of investment over 10-15 years to create one consumable drug or treatment. This unique healthcare ecosystem enables generally two in every three new drugs to originate in the United States.
The COVID-19 pandemic has shown that we are nowhere near the apex of scientific discovery. The potential of American research and discovery (R&D) is exponential, and COVID-19 will not be the last pandemic we face. Now is not the time to stifle the opportunity to save lives and help those in need.
Reference pricing would have limited our ability to combat COVID-19 and future healthcare crises. Thanks to the collective work of health professionals, scientists, private investment, universities, the National Institutes of Health (NIH), policymakers and large pharmaceutical companies, millions of Americans have received a vaccine and with thousands more receiving it each day. As Incubate has written publicly, the underlying modality for these vaccines – which enabled such rapid development – is a true success story of early-stage private capital that would disappear under a reference pricing system.
Nearly 30 years of hard work from the biotechnology community, and millions of dollars of private capital, has produced two authorized vaccines that are being mass-distributed across the nation and additional vaccines currently in Phase 3 Clinical Trials. 5 These vaccines utilize synthetic messenger RNA (mRNA) to synthesize protein in the human body to fight disease, a medical breakthrough that spurred out of a hypothesis from scientists Drew Weissman and Katalin Kariko at University of Pennsylvania in the 1990s.6
That discovery lay dormant until Flagship Ventures (now Pioneering) funded a no-name start up called Moderna. For the past 10 years, the company – while making no products – has invested millions in research to commercialize a specific method of modifying mRNA that explored dedifferentiation followed by redifferentiation in stem cells by inserting mRNA in human cells. 7 Today, Moderna focuses on mRNA solutions to infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and autoimmune diseases.8
The exploration of mRNA as a gene therapy, a historically challenging theory to substantiate, took decades of scientific research to successfully build and administer. A delicate balance is needed for synthetic RNA molecules to alter human cells without activating the body’s immune response, and Moderna and Pfizer have produced the first successful application of the technology.
If the United States introduces price controls – via reference pricing as proposed in MFN or in any other form – the COVID-19 vaccine success would likely not have happened. The Congressional Budget Office and the Council of Economic Advisers agree: reference pricing means fewer medical products.9 What they cannot tell us, is what society will miss. It is our great fear that in this case, the platform of mRNA, which drove COVID vaccine development, would have been lost.
Thank you again for the opportunity to comment. As demonstrated here, the early stage ecosystem strongly opposes this rule and we request the Biden Administration withdraw it.
Incubate is a 501c(4) organization with the mission to ensure patients continue to reap the benefits of the unrelenting innovation spurred by venture capital investment in the life sciences industry
and protected by the American system of intellectual property. Incubate submits these comments in opposition to the November 27, 2020 Interim Final Rule Docket Number CMS-5528-IFC.
1 Most Favored Nation (MFN) Model 2020 (2020, November 27). Retrieved from
https://www.federalregister.gov/documents/2020/11/27/2020-26037/most-favored-nation-mfn-model
2 Elijah E. Cummings Lower Drug Costs Now Act, H.R. 3, 116th Cong. (2020). Retrieved from
https://www.congress.gov/bill/116th-congress/house-bill/3/text?format=xml
3 Venture Capitalist Letter Addressing President Trump’s MFN EO [Letter to President Donald Trump]. (2020,
August 21). Available at www.incubatecoalition.org.
NC MFN Letter and Incubate Package on President Trump MFN EOs [Letter to President Donald Trump]. (2020,
November 17). North Carolina. Available at www.incubatecoalition.org.
4 Sheridan, K. (2019, October 11). How Colorado firefighters and TV writers are fueling the biotech boom.
Retrieved January 25, 2021, from https://www.statnews.com/2019/10/11/venture-capital-money/
5 Different COVID-19 Vaccines. (2021, January 15). Retrieved January 25, 2021 from
https://www.cdc.gov/coronavirus/2019-ncov/vaccines/different-vaccines.html
6 Stanford, J. (2020, December 21). Trump Touts COVID Innovation While Gutting Its Foundation. Retrieved from
https://www.insidesources.com/trump-touts-covid-innovation-while-gutting-its-foundation/
7 Kutz, E. (2010, October 04). ModeRNA, Stealth Startup Backed By Flagship, Unveils New Way to Make Stem
Cells. Retrieved from https://xconomy.com/boston/2010/10/04/moderna-stealth-startup-backed-by-flagship-unveilsnew-way-to-make-stem-cells/
8 Moderna Facts. (2020, August). Retrieved January 25, 2021, from https://www.modernatx.com/about-us/modernafacts
9 Swagel, P. L. (2019). Re: Budgetary Effects of H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act.
Congressional Budget Office. Retrieved from https://www.cbo.gov/system/files/2019-12/hr3_complete.pdf