Medicare Monday: Medicare Part B and biosimilars

With the first U.S. biosimilar approved in March of 2015, the pathway created by the Biologics Price Competition and Innovation Act to bring biosimilars to market for U.S. patients has become a reality.  However, questions still remain about how Medicare will pay for these products and the implications of those policies on access and patient safety. 

On October 31, 2015, the Centers for Medicare & Medicaid Services (CMS) issued final rules detailing how it plans to reimburse for biosimilars in Medicare Part B. Despite receipt of comments from industry, patient advocates, providers and members of Congress calling for distinct coding and reimbursement for all biologic products, CMS plans to blend coding and payment for biosimilar products that share the same reference biologic. In this post we’ll tackle coding and safety related to biosimilars and we’ll cover reimbursement and access in more depth in the coming weeks.

A key aspect of CMS’ policy is that biosimilars that share the same reference biologic will be billed using the same HCPCS code. (HCPCS is a set of alphanumerical codes used to bill Medicare for Part B drugs and other items.) With some exceptions, Part B drugs generally each have a unique HCPCS code unless there is a generic version of the drug available. When generics are available, these “multiple-source drugs” are billed using the same HCPCS code. CMS’ rule for biosimilars is based on its policy for multiple-source drugs, but biosimilars are fundamentally different than generic drugs.

In contrast to chemically-synthesized “small molecule” drugs that can be copied, biological products consist of large, complex molecules that are difficult to define and produce, and therefore cannot be exactly copied. Even though all biosimilars are expected to create the same clinical outcome as their reference products, all biosimilars are unique. And, unlike generic medicines, the potential exists for a biosimilar product to be approved for only one or more of the conditions of use which the U.S.-licensed reference product is labeled.   

Biologic products also carry different risks than small molecule products. All biologic medicines have the potential to cause unwanted immune responses in the body that can cause serious health effects such as allergic reactions or anaphylactic shock; this is called immunogenicity. CMS’ policy will jeopardize patient safety by making it more difficult to track these types of adverse events. If the same HCPCS code is used for multiple biosimilars, it will not be possible to use the HCPCS codes to help determine which biosimilar was administered to a patient from the health care claim, hindering efforts to quickly and accurately identify the product associated with an adverse event. 

As the number of biologics entering the marketplace continues to increase, this ability to distinguish between products is critical. Unique HCPCS codes, in addition to distinguishable nonproprietary names for all biological products, are critical to ensuring that pharmacovigilance systems can distinguish between different products, promptly collect adverse event information on biosimilar products, and encourage a safe and competitive biosimilars market that will provide options for patients and providers.

CMS’ policy for blended coding and reimbursement also holds significant implications for patient access and the evolution of the marketplace for biologics. We’ll explore these topics in a future Medicare Monday.