Biosimilar Medicare Part B Payment Boost Begins

One of the first provisions of the Inflation Reduction Act (IRA)—a temporary boost in payments to encourage the use of biosimilars—took affect Monday.

Section 11403 of the IRA calls for CMS to implement a temporary increase in Medicare payment for qualifying biosimilars for 5 years. It seeks to incentivize providers to prescribe biosimilars by paying them an add-on fee of 8% of the average sales price (ASP) of the reference drug in addition to the cost of the biosimilar, a 2-percentage point increase from the current 6%.

ASP is calculated based on manufacturers’ sales to all US purchasers minus manufacturer rebates, discounts, and price concessions (with certain exceptions). Manufacturers report ASP data to CMS quarterly.

“CMS is swiftly implementing the historic Inflation Reduction Act to make the new law and the benefits it provides a reality for the people we serve,” CMS Administrator Chiquita Brooks-LaSure said in a statement. “The temporary Medicare Part B payment increase for qualifying biosimilars that is now in effect will foster competition in the drug marketplace for conditions such as diabetes, cancer, and immune disorders, and will improve access to these life-saving medicines that help keep people with Medicare healthy.”

For existing qualifying biosimilars for which payment was made using ASP as of September 30, 2022, the 5-year period began on October 1, 2022.

For new qualifying biosimilars for which payment is first made using ASP between October 1, 2022, and December 31, 2027, the applicable 5-year period begins on the first day of the calendar quarter during which such payment is made.

In an interview conducted earlier this year for The Center for Biosimilars^®, Julie Reed, executive director of the Biosimilars Forum, noted that Medicare reimbursement is critical for next year, when up to 10 adalimumab biosimilars referencing Humira, one of the most profitable drugs in the world, will launch.

The Biosimilars Forum was not in favor of the IRA but was pleased with the inclusion of the boost in ASP payments, she said.

"The Biosimilars Forum applauds CMS for the quick implementation of its ASP+8% policy.... By increasing the add-on payment for certain biosimilars, the U.S. can reduce healthcare costs by as much as $8.2 billion over the next decade, while also driving the price down for all biologics....Still, more must be done to support biosimilars," Reed commented in a statement from the Biosimilars Forum.

The biosimilar provision in the IRA had previously been proposed and supported by the Forum in House and Senate legislation in 2019.