CMS Revisits Biosimilar Payment Policy: Industry Comments Signal Expected Changes

Regulatory NewsRegulatory News | 30 October 2017 |  By 

A tweak to a Centers for Medicare and Medicaid Systems (CMS) billing code system that could come later this week would have a big impact in making US biosimilars more competitive with their reference products.


CMS' Medicare Part B program currently pays for biosimilars under the Physician Fee Schedule (PFS) based on the average sales price (ASP) of all biosimilar products within the same Healthcare Common Procedure Coding System (HCPCS) code, which means that biosimilar products with the same reference product are grouped together for purposes of calculating an ASP and physicians are reimbursed the same amount under Part B for all such biosimilars.

The coding system for biosimilars is also separate from the coding system for their reference products, meaning that as the price of a biosimilar is reduced, the ASP, which is the basis for reimbursement, also declines, though reference products' ASPs remain unaffected.

In its annual proposed rule to revise payment policies under the Medicare physician fee schedule posted in July, which would apply as of 1 January 2018, CMS requested comments regarding its Medicare Part B biosimilar payment policy, as well as data to demonstrate how individual HCPCS codes could impact the US biosimilar market.

Analyst Comments

Bernstein biotech analyst Ronny Gal said in a note to investors on Monday that the current situation "provides the innovator with important advantages, especially when it comes to chronic conditions."

For instance, the innovator of the reference biologic can control its ASP by allowing a discount for one provider but not another, and raises or reductions to its ASP, while biosimilar companies are dependent on the prices that other biosimilar companies offer.

In addition, a reference product manufacturer can assure a provider buying its product that the reimbursement will not go materially down between the time of product purchase and the use/reimbursement, though a biosimilar company cannot be sure what the price will be, Gal noted.

He also explained, while noting that it is "reasonable to expect that any changes would be announced as part of the 2018 PFS, which is expected November 1," the two potential alternatives to the current system: Give every biosimilar its own J-code (a move favored by industry), or group all biosimilars and reference products into a single J-code, which could effectively lower prices more quickly.

Industry Comments

In comments submitted to CMS and posted online in September, industry lobbying groups PhRMA and BIO urged CMS to revise its biosimilar reimbursement policy to provide for separate HCPCS codes for each biosimilar and to reimburse each biosimilar based on its own ASP.

BIO reiterated its "firm belief that a separate HCPCS code and separate payment rate for each biosimilar product, even within the same reference product, is the best policy to maximize patient safety and access to appropriate therapies and to foster a competitive, innovative market for biosimilars."

The generic drug industry lobbying group's Biosimilars Council also followed suit, recommending that each biosimilar be assigned its own code in the HCPCS system and paid at a uniquely-calculated payment rate based on that biosimilar's own ASP.

"Fundamentally, this is because the statute treats these biosimilar products as nonsubstitutable. To have a level playing field, the Medicare payment rate for biosimilars should reflect the same approach applied to other non-substitutable products. Without such a level playing field, it is doubtful that biosimilars will ultimately be able to achieve the kind of success envisioned by Congress when they passed the BPCIA ultimately limiting patient access to more affordable therapies," the council said.

Similarly, QuintilesIMS is calling for each biosimilar to be assigned a unique HCPCS code instead of blending multiple biosimilars into a single code.

"CMS' current policy of using modifiers for biosimilars reimbursed under the same HCPCS code makes such data collection difficult. First, the use of these modifiers, which is unique to biosimilars, applies only to Medicare and not other payers. Thus, tracking of adverse events across these payers would prove challenging," QuintilesIMS said.

Novartis also encouraged CMS to revise its reimbursement policy in the PFS Final Rule to allow for distinct coding and payment for each biosimilar.

"In particular, effective January 1, 2018, we request that CMS pay each biosimilar at 100% of its own individual ASP (plus a fixed percentage of the reference product's ASP, as is already clearly established) and under its own HCPCS code. Such a policy would spur competition in the market and allow patients greater access to drugs at lower prices," Novartis said.



© 2022 Regulatory Affairs Professionals Society.

Discover more of what matters to you

No taxonomy