Biosimilars Council Says New Reimbursement Rules Will Hurt Competition in the Biosimilars Market

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The GPhA and its Biosimilars Council expressed concern about the new proposed value-based reimbursement rules for Part B medications.

Changes by the Centers of Medicare and Medicaid Services (CMS) to the way drugs are reimbursed under Part B in Medicare will damage incentives for healthcare systems to embrace biosimilars, argued the Generic Pharmaceutical Association’s (GPhA’s) Biosimilars Council in comments to CMS on May 9, 2016.

While the group believes that Medicare expenditures are too high, it does not agree with the CMS policy as it is proposed. The group says the changes to the reimbursement policy risk “limiting the savings created through open market competition, particularly in the nascent biosimilars market.” Specifically, the group does not agree with the decision that the rate of reimbursement be lowered to 2.5% and be coupled with a flat fee of $16.80 per drug per day, calling the proposed coding and average sales price (ASP) calculation methods a “significant departure from current CMS policy” that will “unfairly disadvantage non-interchangable biosimilars.” The add-on percentage for the reimbursement of biosimilars should be based on the ASP of the reference product, the GPhA-affiliated group wrote.

Corresponding to what the Community Oncology Alliance pointed out in March 2016, the Biosimilars Council said that the CMS proposal does not take into account the effects that sequestration has already had on physician reimbursement. The group noted that reducing payment to providers even more will not make financial sense. “We believe that for biosimilar products and some specialty generics, this reduction in payment may increase the number of providers who are unable to acquire prescription drugs at or below the payment amount, leading to beneficiary access issues. The reduced payment methodology also does not take into account the fact that some Part B prescription drugs, especially anti-cancer therapies, have high storage and handling costs that are unavoidable.”

The council takes issue with the suggestion in the proposal to use reference pricing for groups of therapeutically equivalent drugs. Instead, says the Biosimilars Council, CMS should assign unique Healthcare Common Procedure Coding System (HCPCS) and ASP codes to each biosimilar, considering these biosimilars are not interchangeable. Reimbursing them with the same formula under the same HCPCS code is a model based on generic drugs, and biosimilars should not be reimbursed using the generic drug financial model. If they are, the financial incentives to develop biosimilars disappear, they argued. The council stated it is still too soon to create value-based pricing tools for biosimilars, and the current timeframe for implementation (i.e., starting at the end of 2016) is too aggressive. It would also be too difficult to measure the impact of the program, it said, as only two biosimilars are approved by FDA and are currently on the market. Additionally, the council said value-based purchasing tools must account for the cost of total patient care, not just the cost of medications.


PhRMA has also expressed dissatisfaction with the proposed rule, and said in a statement in March 2016 that the proposal does not consider stakeholder input.

Source: GPhA