Welcome to our new website! If this is the first time you are logging in on the new site, you will need to reset your password. Please contact us at email@example.com if you need assistance.
Your membership opens the door to free learning resources on demand. Check out the Member Knowledge Center for free webcasts, publications and online courses.
The highly-anticipated fifth edition is here! Get the must-have resource for achieving compliance with medical device regulations.
Hear from leaders around the globe as they share insights about their experiences and lessons learned throughout their certification journey.
The Centers for Medicare and Medicaid (CMS) last week announced a major shift in how it will reimburse for biosimilars under Medicare Part B, and though the agency and market might not see the full impact of the decision for another decade, experts explained to Focus what the change will likely mean in the near and long term.
And though the predictions are largely hypothetical (since there are not currently multiple biosimilars for any reference biologic on the market in the US), all seemed to agree that encouraging more competition in the biologics space will likely lead to lower prices and reduced spending. And those savings could be sizable considering that in 2015, biologics accounted for 65% of Medicare Part B spending, totaling $26 billion including Medicare and beneficiary payments.
Since 1 January 2016, biosimilars for a common reference product were grouped under the same Healthcare Common Procedure Coding System (HCPCS) code, meaning biosimilars were grouped into the same payment calculation for determining a single average sales price (ASP) payment limit.
Under the new policy announced last Thursday and effective 1 January 2018, all approved biosimilars will get their own HCPCS codes. How that will precisely play out is unknown as of yet, and CMS said it will issue detailed guidance on coding, including instructions for new codes for biosimilars that are currently grouped into a common payment code and the use of modifiers.
At first blush, CMS' change on the HCPCS codes would mean biosimilar prices will not fall as quickly in the short term when compared with the previous policy because multiple biosimilars for the same reference product will no longer compete with one another on price under the same code.
Bernstein biotech analyst Ronny Gal agreed, telling Focus that although he does not think the new policy's full impact will be understood until between 2020 and 2025, he noted, "First rule of sales is not to lower price if you can avoid it and here they have more room to avoid it."
Ian Reynolds, who manages Pew's drug spending research initiative, also agreed, telling Focus: "Compared to current policy, this change will limit price competition among biosimilars for the same reference product."
Michael Werner, policy advisor for the industry group Biosimilars Forum, told Focus that over the longer term, the individual codes may encourage more compan
Currently, biosimilars may be approved for fewer indications than the reference product, and the approved indications within a group of biosimilars with the same reference product may vary.
"The existing [CMS] policy might have saved money in the short term because all biosimilars tied to same reference product are treated the same," Werner added, but that policy is inconsistent with the science of biosimilars and contrasts with US Food and Drug Administration (FDA) policy that distinguishes biosimilars from generic small-molecule drugs.
And whereas Pew's Reynolds told Focus he believes providers may have less incentive to use lower-cost products under the new CMS policy, Gal said he does not "see why this would be the case. Those incentives do not change."
Werner agreed with Gal, noting that under the current policy, providers could end up buying a product and with all the prices averaged together, they could end up paying more than what they're reimbursed for.
In the Federal Register notice announcing the policy change, CMS said another potential problem Part B has already experienced is "a situation where the initial, [wholesale acquisition cost] WAC-based payment amount for a biosimilar of infliximab exceeded the ASP-based payment for its reference product by about 20 percent."
How the new policy will help to ensure the robustness of the US biosimilars market remains to be seen. For now, all eyes are centered on the new policy's implementation and which new biosimilars will win FDA approval.
Tags: biosimilars, Medicare Part B, biosimilar reimbursement