Biosimilar Provisions Feature Heavily in Senate Finance Bill

The Senate Finance Committee has released its long-awaited chairman’s mark of the Prescription Drug Pricing Reduction Act of 2019. The bill, aimed at lowering the cost of drugs for American patients, contains a number of provisions that impact biosimilars.

First, the bill would establish a wholesale acquisition cost (WAC) add-on payment of average selling price (ASP) plus a maximum of 3% for drugs, biologics, and biosimilars when an ASP is unavailable, conforming to current Medicare payment rules established by CMS. It would also establish a payment rate for biosimilars during a 2-quarter initial period of either the biosimilar’s WAC plus 3% or ASP plus 6% of the reference product’s price, whichever is lower.

The bill would also increase the add-on payment for a biosimilar from 6% of the reference product’s ASP to 8% over a 5-year period starting in January 2020. It would also establish a maximum add-on payment amount of $1000 for separately payable drugs.

In calculating ASP, drug makers would be required to account for the value of patient assistance coupons; currently, manufacturers are not required to include such price concessions that are made directly to patients in the form of coupons, which the committee states could result in higher payments.

Another notable provision of the legislation is a requirement that drug makers pay a rebate to Medicare for the amount that their Part B products’ prices rise above the rate of inflation. Biosimilars paid under Medicare Part B would not be subject to this restriction. A parallel provision would establish rebates for Part D drugs, excluding biosimilars and generics, whose prices rise faster than inflation.

A restructuring of the Medicare Part D benefit, one that Congress says would help steer utilization of generics and biosimilars, would eliminate the coverage gap and establish 25% cost sharing between the annual deductible and the catastrophic threshold, which would be set at $3100 in 2022. It would also make Medicare responsible for 20% of drug spending in the catastrophic phase, and insurers would pay 60%. Drug makers would provide 20% discounts in the catastrophic phase, including for low-income subsidy beneficiaries.

Finally, HHS would be required to publish data on pharmacy benefit managers (PBMs)’ rebates and discounts. Part D insurers would need to conduct financial audits related to their PBM contracts every 2 years to gather these data, and PBMs that fail to comply with audit requests could incur monetary penalties. Part D insurers would also have to report to pharmacies any point-of-sale adjustments for price concessions or incentives on covered drugs. Finally, insurers would have to report direct and indirect remuneration amounts in their bids for Part D coverage.

The Congressional Budget Office’s score of the bill indicates that, if the bill is enacted into law, taxpayers would see a total of $85 billion in savings in Medicare and $15 billion in savings in Medicaid. Beneficiaries would save $27 billion in out-of-pocket costs and another $5 billion in premiums.

Chip Davis, president and chief executive officer (CEO) of the Association for Accessible Medicines, which represents generic and biosimilar developers, praised the bill, saying in a statement that the legislation is “a step in the right direction.”

The Biosimilars Forum, another trade group representing biosimilar makers, highlighted its support for the ASP plus 8% provision for biosimilars, saying in a statement that “the US has lost billions in potential health care savings because of slow biosimilar growth…we look forward to continuing to work with the Senate Finance committee to implement policies that will support a robust biosimilars market.”

Meanwhile, Stephen J. Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, which represents brand-name drug manufacturers, said in a statement that the group opposes the bill, which it says “fails to meet the fundamental test of providing meaningful relief at the pharmacy counter for the vast majority of seniors.”