Which Reimbursement Changes Can Help Encourage Biosimilar Uptake?

A recent white paper recaps the many barriers to biosimilar adoption in the United States and proposes a few ways that plans could change their reimbursement policies to help boost uptake.

The paper, by Millman, said that fixed reimbursement, a system in which providers would be reimbursed the same amount no matter which product was administered (reference product or biosimilar) would create an incentive to prescribe the lowest-price product.

Differential reimbursement, meanwhile, would allow a larger markup on biosimilars so that providers would be safeguarded from a loss in profits. Commercial payers would pay more in markup, but since they have a lower average sales price, it would be less expensive to pay for biosimilars with a higher markup than an originator product with a lower markup. This would lead to higher biosimilar reimbursement for commercial payers but overall savings if providers had a financial incentive to prescribe biosimilars.

Federal policy changes could also increase the use of biosimilars, the paper said. Specifically, it cited the following:

• The proposed International Pricing Index (IPI) model, under which CMS could set the price for some biologic drugs under prices paid in other nations.
• Part B step therapy, under which Medicare Advantage plans would be allowed to use step therapy, or prior authorization. This could result in plans preferring biosimilars.
• Indication-based formularies, which could encourage Part D sponsors to use biosimilars for some indications that will lose patent protection or market exclusivity.
• The coverage gap discount program (ie, the donut hole), under which due to the Bipartisan Budget Act of 2018, the exclusion of some biosimilars is ending, which could encourage Part D drug plans to consider them for Medicare beneficiaries.

The paper also cited the FDA’s Biosimilar Action Plan, including the 4 key strategies to induce competition in the US market. They include increasing efficiency around the development and approval process; expanding the Purple Book in order to increase clarity and support around biosimilar development, as well as the Biosimilar Product Development program to speed up and promote development; an education initiative; and reducing attempts to delay approval by originator manufacturers of reference products.

The report notes that some of the most “meaningful solutions are largely beyond the authority of the FDA.”

In fact, this week HHS issued a proposed rule that could help the market for biosimilars. The rule is intended to reduce patients’ out-of-pocket costs for prescription drugs by blocking rebates and discounts given to pharmacy benefit managers (PBMs), Part D plans, and Medicaid managed care organizations and encourage discounts to go straight to patients.

The rule would exclude rebates from safe harbor protections that currently shelter drug makers’ rebates from penalties under the federal anti-kickback statute, and would create new safe harbor for discounts offered to patients, as well as fixed-fee service arrangements between drug makers and PBMs.