How does CMS payment policy for Medicare, Medicaid, and 340B hospitals affect biosimilar uptake? A speaker at the recent at the 2020 Specialty Therapies and Biosimilars Congress explained.
Biosimilar pricing dynamics undergo some interesting gyrations when public payer policies come into play, Molly Burich, MS, director of public policy for biosimilars and pipeline at the pharmaceutical giant Boehringer Ingelheim, said at the 2020 Specialty Therapies and Biosimilars Congress in Miami, Florida.
Take the 340B drug discount program, for example. Biosimilars are treated as innovator products and are accorded “pass-through status” under 340B policy, which means 340B hospitals that use them are reimbursed at the rate of average sales price (ASP) plus 6%, rather than ASP minus 22.5%, which applies to the older, brand products the biosimilars replicate, Burich noted.
This relatively recent policy has sparked debate, as it allows 340B hospitals to potentially obtain much higher payments for biosimilars than originator brands and incentivizes them to prescribe biosimilars instead of original brands.
“Originator companies don’t like this. They have tried to get pass-through status yanked for biosimilars. They’ve argued “they’re highly similar, they’re not new products,” Burich said. “But to CMS, they’re new products, they get an ASP, and they get a new payment code. You now have this push-pull of whether a biosimilar—which is a highly similar version of an originator product—should have pass-through status.”
There’s no indication that this policy is going to change soon, however. “CMS has for the past 2 or 3 years upheld their decision on pass-through,” Burich said.
On the surface, mandatory manufacturer cost rebates in Medicaid apply equally to brand biologics and biosimilars, but rebate values will be higher for originator biologics that have seen price increases, based on the payment formula. This represents an obstacle for biosimilars to become established in Medicaid coverage, Burich said. “You see many originator products moving toward a 100% rebate. It’s hard to compete with free.”
Medicare Part D
Under Medicare Part D, the manufacturer pays 70% of the discount in the coverage gap, which begins after patients have spent a pre-established amount for covered drugs. This means that under Medicare, “biosimilars and brands are now treated the same, which puts them on equal footing with regard to patient cost share as well as the plan responsibility. That’s an important piece, we believe, that will drive competition when we get there, in Part D,“ she said.
Medicare Part B
There is also equal footing of a sort for biosimilars and brand drugs under Medicare Part B, Burich said. Originator biologics are issued “J codes” for payment and are paid at the rate of ASP plus 6% at the physician office and the hospital outpatient center, unless exceptions apply. Biosimilars receive “Q codes” for payment and ASP plus 6% applies for them, too.
“Until now, new biosimilars have been granted a Q code at launch. But CMS is changing that to issuing Q codes once every quarter. I’m not sure what that will mean for the market. “I think the most important thing is we want a product-specific code. We don’t want to lose the timeliness that we’ve been getting,” she said.
These issues will become more significant as the biosimilar market develops further. The year 2019 saw more biosimilar approvals and launches in the United States than in any previous year.
“We expect to see a significant pace of approvals moving forward,” she said.
Etanercept (Enbrel) and adalimumab (Humira) so far have held off against biosimilar competition. There are multiple biosimilars approved for each of these products, but none have launched. That is changing, Burich said.
AbbVie has settled with virtually all biosimilar companies for adalimumab biosimilar launches that will begin in January of 2023, she said. “Enbrel remains in legal limbo around when a biosimilar can launch.”
Zarxio was the first biosimilar to launch. It is the only biosimilar that has eclipsed the originator market. Zarxio now has 54.9% of the market for filgrastim products, versus 44.8% for Neupogen. “That took them about 4-and-a-half years,” Burich noted. “Is that a successful market? The generics utilization market didn’t go to 90% in a few years either.”
Infliximab biosimilars Inflectra and Renflexis have done poorly by comparison. “Combined, those 2 have single-digit market share, which after 2 to 3 years is not a great success story. What we’re seeing depends on product, dynamics, and originator company behavior, but for people in the biosimilar space, I think we want to see more, better uptake, and quicker,” Burich said.