Importantly, the policy only applies when a biosimilar’s price is lower than the price of the brand-name reference biologic. This guarantees savings to Medicare and reduces out-of-pocket costs for seniors.
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Patient Advocacy Groups Offer Support for BIOSIM Act
The BIOSIM Act would increase the add-on payment for use of a biosimilar, thereby incentivizing practitioners to use these products more often, according to proponents of the bill.
Hoping to stimulate greater use of biosimilars, 28 patient advocacy groups have thrown their weight behind draft legislation that would increase Medicare reimbursement to health care institutions when they prescribe these agents for patients.
The draft legislation would impose a revision to a Medicare payment policy that has been changed before to stimulate biosimilar uptake.
Biosimilars advocates, including companies that produce and distribute biosimilars, contend that additional changes are needed to more successfully incentivize prescribers to choose biosimilars over reference products, which tend to cost more than biosimilars.
The 60 Plus Association, CancerCare, and Healthy Women are among the groups that have endorsed the Bolstering Innovative Options to Save Immediately on Medicines (BIOSIM) Act, which increase physician reimbursement for use of biosimilars.
“According to a recent analysis, women, seniors, and low-income individuals are expected to benefit most from increased access to biosimilars, as they are predominantly impacted by the conditions currently treated by higher-cost biologics for which biosimilar competition can reduce costs. However, despite average cost savings of 30%, biosimilar adoption continues to trail expectations,” the patient advocacy groups state in a letter supporting adoption of the BIOSIM Act.
The legislation has been spearheaded by the Biosimilars Forum and the Biosimilars Council, which represent producers and distributors of biosimilars and generic drugs.
Under current policy, Medicare reimburses based on the average sales price (ASP) of the biosimilar brand plus 6% of the reference product price. Prescribers who choose the reference product get 100% plus 6% of that product’s ASP.
The rationale is that if doctors got 6% of the lower-priced biosimilar, they would be incentivized to prescribe the higher-priced product every time, in order to get 6% of the higher value, and nobody would prescribe the lower-cost agent unless they were committed to saving money for Medicare.
The BIOSIM Act would increase the add-on percentage for biosimilar use to 8% of the reference product ASP, and reference product use would continue to garner just the 6% add-on. The 8% add-on would apply only to biosimilars that cost less than the reference products.
Once a biosimilar qualifies for the additional payment and a payment is made under this policy, the 8% rate would continue for 5 years for that particular biosimilar, assuming the biosimilar continues to qualify as a lower-cost product.
Originally, CMS calculated the ASP for all biosimilars in a category and arrived at a single base price. The add-on payment was still based on the higher reference product price. This was considered a “blended” payment formula.
However, one of the opposing arguments was that biosimilars were not all alike, because some were approved for more indications than others. This led to CMS issuing separate payment codes and reimbursement amounts for each biosimilar. Providers were then reimbursed based on 100% of the individual biosimilar’s ASP plus 6% of the reference product’s ASP.
Additionally, because it takes time to establish an ASP for newly marketed biosimilars, CMS initially reimburses biosimilar use at 106% of the wholesale acquisition price (WAC), which is what manufacturers charge drug wholesalers.
Under the BIOSIM Act, the WAC for a biosimilar also should not be more than the WAC of the reference product.
In their letter addressed to the sponsors of the legislation, Representatives Kurt Schrader (D-OR) and Adam Kinzinger (R-IL), the advocacy groups did not make the distinction that the 8% payment would apply to the cost of the higher-cost reference product, not the biosimilar.
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