CMS' Changes to Reimbursement for Biosimilars

Amanda Forys, MSPH: I always look between what Medicare is doing on the Part B, physician-administered side, and what they’re doing on the Part D side. It looks like they’re trying to encourage a market, a robust market, but then it does look like they’re trying to do things to save money.

On the B side, originally, when they came out with the first rule on biosimilars starting in 2016, any biosimilar to a reference product would share a billing code. Then, all of the reimbursement would be combined and they would get their average sales price blended together, plus 6% of the reference product.

A lot of people in the industry said, “Wait a minute, you’re doing that and you’re grouping us together, you’re treating us like generics but we’re not generic products. We are unique products, we’re not biosimilar to one another, [and] you’re putting challenges of pharmacovigilance by putting a bunch of products that could have different indications together. You’re making it really hard on providers [and] you’re making it really confusing for patients,” and CMS just turned that over. They said…starting in 2018, each biosimilar will get its own J-code. It almost seems like on the B side they’re letting a biosimilar be a brand. But then, on the D side when they came out with their rule this year, they actually want to now change the definition of a generic to include a “follow-on biologic.”

That helps the cost savings for a patient with a low-income subsidy because they were going to have to pay—which, we don’t have a part D drug out yet but when we do—they would have to pay that brand subsidy amount and now they can pay the generic amount. That’s great for a low-income subsidy patient.

[However], it doesn’t really change much on the non—low-income subsidy. So, a regular part D enrollee now, they’re still treating the product as a generic, but this pretty much says though now if you change this definition, for sure now a manufacturer cannot participate in the coverage gap discount program.

As we all know, for beneficiaries, even though the donut hole is closing, that’s a 50% rebate you get from the manufacturer. It counts towards your true out-of-pocket, and it helps you if you’re on really expensive drugs, [be able to] get into that catastrophic coverage sooner, and then you only have a 5% copay there. So, we’re saying on the D side, generic, we’re saying on the B side, brand, almost.

Think about that, how does that work, how does the coverage gap discount program [work]? How do you think that will all play out? What do you think they should be prioritizing?

Christy M. Gamble, JD, DrPH, MPH: We really want biosimilars to be included as part of the coverage gap discount program because right now, patients are going to be pushed towards these more expensive biologics that have higher out-of-pocket costs, which is very disturbing to us. So that was disappointing. I know we’re pushing for Congress to include biosimilars in the program now, so hopefully that will go through.

We were excited with CMS giving the individual J-codes as you mentioned, because that provides an incentive to manufacturers now and it relieves patients of some of that confusion, same with providers, and we’re more likely to see some more biosimilars come on the market, and patients have access to the lower-cost biosimilar[s]. But it’s really interesting how there’s no consistency here.

We’re kind of running in circles trying to figure out what’s going on and how we can better advocate for patients getting access to these lower-cost biosimilars. Like I said, we were very excited about CMS, and we’re still pushing to make sure that biosimilars are included in this discount program for Medicare on Part D.

Amanda Forys, MSPH: So, to push a little bit more on the B side aspect of the question, a lot of people who said, if you keep them with the same code, you’re going to force the price down and you’re going to get that race to the bottom. You’re going to get the cheapest biosimilars because they’re sharing a code and they’re going to have that competition. If you keep them apart, the price might not go as low but the availability of the products is likely to be higher. So, you all, as an organization kind of went on this case more with the concept of the availability of the market and that it will regulate itself over time.

On the D side, with the LIS, the low-income subsity, I’m sure [with] the lower subsidy you guys are hoping they can count it for the generic, and then on the non-low-income subsidy, you want the coverage gap discount program.

Christy M. Gamble, JD, DrpH, MPH: Yes, yes, interesting, huh?

Amanda Forys, MSPH: It’s a tough concept, I mean at the end of the day, the manufacturers want to—where they can—be involved in this discount program. And people have said to me before, clients that don’t quite get the issue, “Well what does it matter? At the end of the day, for a $100 drug in 2020, the patient pays $25 bucks if it’s a brand, or $25 bucks if it’s a generic.”

[But] no, they pay $25, but if it’s a generic, $25 gets counted towards your out-of-pocket, $75 gets counted toward it if it’s that brand, that’s a huge differential. It doesn’t really give a provider an incentive at all to use a biosimilar for a Part D patient whatsoever.

Christy M. Gamble, JD, DrPH, MPH: Absolutely, and these policies are all about providing those incentives, to make sure that patients get access to that lower-cost biosimilar.