Biosimilar Reimbursement a Lingering Challenge, According to Industry Expert

Reimbursement remains a substantial concern in the market for biosimilar products, according to Amanda Forys, MBA, director of Xcenda’s Reimbursement Policy Insights consulting team.

Forys told The American Journal of Managed Care® in an interview that “The biggest concern with biosimilars coming to the market…[is] around the stability of the market and where we think it can go in the future. While we’ve got products coming to market, there’s a lot of concern around reimbursement, policy, and coverage for these products, and if [biosimilars] will be sustainable in the future.”

The most pressing reimbursement questions center on Medicare; according to Forys, the industry needs clarification on whether a biosimilar could be considered a brand for the purposes of Medicare Part D coverage. In 2017, the Medicare coverage gap begins once a patient reaches $3700 in drug spending, and closes once the patient has spent $4950. During that gap in coverage—also known as the “donut hole”—the manufacturer’s rebate on branded drugs counts toward the patient’s out-of-pocket spending, thereby closing the gap more quickly. Yet biosimilars are not currently considered branded drugs. Says Forys, “Here you’ve got a product that Medicare isn’t counting as a brand, so patients in that coverage gap are not getting any help; the patient is still paying a bit more for the prescription. At the end of the day, a plan’s going to say, ‘How are we sitting with these products, how are patients paying out of pocket, what type of utility are we seeing from everyone’s perspective?’”

Additional challenges to biosimilar reimbursement for Medicare center around billing codes. Currently, all biosimilars for the same reference product must be assigned a single billing and payment code, or J-code, and are reimbursed at a blended rate. CMS has suggested that it may alter this policy after some stakeholders criticized the approach for having a chilling effect on competition.

One proposed alternative is the assignment of a unique J-code to each biosimilar product, but Forys says that the Medicare Payment Advisory Commission (MedPac) has other ideas: "You’ve got MedPac coming in, and they’re saying ‘we want to simplify the whole system…we’d like to see the originator product and the biosimilar grouped together and share a code.’” While such an approach could save Medicare money by driving down the cost of the branded reference biologic, Forys says that it is not clear whether it would be legal under the Biologics Price Competition and Innovation Act to make such a grouping.

What is clear, however, is the fact that there has been little in the way of incentive for biosimilar uptake. “We’re not necessarily seeing payment systems or any type of models being designed yet to encourage the use of these products. So, we’re not seeing reimbursement being completely different for these products, or providers getting a bonus, or any type of quality metric for using biosimilars,” Forys says.

Forys sees a need for a change in perspective in the industry. “There’s a mindset that has to be put in place around biosimilars,” she said, for stakeholders to understand the scale of the investments necessary to develop biosimilar products. In an industry in which the drug development process can take 8 to 10 years and cost between $100 and $200 million, incentives for product uptake could influence a manufacturer’s decision to continue to pursue a biosimilar pipeline as a sustainable part of its business model.