Medicare Monday: Part B and biosimilars, part 2

Earlier this month, Medicare Monday covered the Center for Medicare & Medicaid Services (CMS) final rule on reimbursement for biosimilars and the implications of using a single billing code to reimburse biosimilars that share the same reference products on pharmacovigilance efforts. 

CMS’ policy will also change the payment rate for biosimilars under Medicare Part B and, in doing so, it could create barriers to physician and patient choice in accessing clinically appropriate treatment options.

As we’ve covered in the past, reimbursement for Part B drugs is generally the average sales price (ASP) plus 6 percent. For biosimilars, reimbursement is set at the ASP of the biosimilar plus 6 percent of the innovator product’s ASP. Congress established this formula to recognize the unique characteristics of biologics; the 6 percent add-on payment to the physician is the same regardless of whether the innovator biologic or one of its biosimilars is used.

Despite Congressional intent, CMS plans to deviate from this formula by reimbursing biosimilars that share the same innovator product at a blended rate, meaning that their reimbursement will be a volume-weighted average of the ASPs for each product and physician reimbursement will differ depending on the product used. This means physicians could experience reimbursement losses for choosing a particular biosimilar, regardless of whether the product is the most clinically appropriate for the patient. Moreover, CMS’ policy could make it difficult for providers to maintain an inventory of certain products if they are unable to recoup their acquisition costs, which would create access barriers for patients. 

This is particularly concerning given that the Food and Drug Administration (FDA) has not yet definitively addressed how it will evaluate and compare multiple biosimilars for the same reference product.  (In the absence of data that directly compares the safety, purity and potency of biosimilars to one another, there is no basis for assuming that the two biosimilars of a reference product are biosimilar.) 

With FDA approval of the first biosimilar in March 2015, and additional approvals anticipated next year, Medicare will now begin to implement these policies. While the impact of CMS’ policy change remains to be seen, there is a risk that CMS’ reimbursement changes could have the unintended consequence of stifling innovation and patient access in this emerging market.