White House Budget Contains a Raft of Biosimilar Proposals

The Trump administration has released its proposed budget for the fiscal year 2020, and contained within it are a variety of proposals that impact biosimilars.

The fact that the House of Representatives is under Democratic control means that it is highly unlikely that the budget will be approved, but the document does give signals as to the administration’s developing position on biosimilars.

The HHS section of the budget hails the FDA’s record-breaking number of biosimilar approvals in 2018, and credits the FDA with helping to promote efficient, predictable, and science-based regulatory requirements that will help to reduce the time it takes to develop biosimilars.

It goes on to put forth the following proposals for advancing the Biosimilar Action Plan and promoting competition in the coming year:

Creating disincentives for pay-for-delay agreements. Pay-for-delay agreements are those in which in which brand-name drug makers compensate generic or biosimilar developers if they agree to keep their competitive products off the market for a certain period of time. The budget proposes reducing the payment for innovator drugs from average sales price (ASP) plus 6% to ASP minus 33% in cases in which a pay-for-delay agreement is made or in which a manufacturer “takes another anti-competitive action” after exclusivity expires. Once biosimilars become available for innovator biologics, CMS would pay ASP plus 6% for both the innovator and biosimilar products.

Amending the Public Health Service Act to state that biologics do not have to meet the same United States Pharmacopeia standards as non-biologic drugs. According to the budget, this revision will make it easier for biosimilars to enter the market.

Reducing the Medicare payment for single-source Part B drugs. This proposal, which applies to single-source biosimilars and other products in cases in which ASPs are not available, would lower the payment for single-source products from 106% of wholesale acquisition cost (WAC) to 103% of WAC. The budget also requires Part B drug makers to report ASP data.

Eliminating pass-through payments. Under this policy, biosimilars as well as other biologics and drugs would no longer be eligible for pass-through payments, but they would be eligible for reduced 340B payment or immediate bundling under the Medicare Outpatient Prospective Payment System. According to the budget document, such a change will give manufacturers less incentive to make small changes to products in order to qualify for higher pass-through payments.

Restructuring the coverage gap discount program. This change to the program would exclude manufacturer discounts from calculations of patients’ true out-of-pocket-costs for branded drugs and biosimilars.

Eliminating cost sharing for generic drugs and biosimilars for low-income subsidy (LIS) beneficiaries. This proposal, says the budget document, encourages the use of high-value products among LIS beneficiaries by reducing their cost sharing to $0, producing $930 million in savings over 10 years.

Giving the FDA more authority to address abuses of citizen petitions. The budget proposes to give FDA the authority to summarily deny citizen petitions and eliminate the 150-day response timeframe for addressing such petitions. Citizen petitions have come under fire as methods used to delay generic or biosimilar competition.

Other proposals put forward in the budget include allowing some Part B drugs to be moved to Part D to allow HHS to leverage Part D plans’ negotiating power, clarifying how manufacturers who sell authorized generics of their own products can calculate their average prices, capping the growth of the ASP payment of Part B drugs at the Consumer Price Index for all Urban Consumers quarterly, and capping beneficiary out-of-pocket spending in the Part D catastrophic phase, among others.