CMS Finalizes Biosimilar Reimbursement Rule

All biosimilars for a specific product will be reimbursed with the same J-code under Medicare Part B regardless of manufacturer, according to a CMS rule that was proposed in July 2015 and finalized on Oct. 30, 2015. The rule was finalized prior to any formal guidance from FDA on interchangeable products.  CMS said it did not consider interchangeability into its decision, as there are no currently approved interchangeable biologics on the market. It said in the Federal Register that “issues such as the naming convention and specific interchangeability standards are complicated, may require some time to finalize, and are not directly relevant to Medicare Part B payment policy.” Instead, the agency said it believes “it is important to implement a payment policy for biosimilars now, before the second biosimilar for any reference product becomes available, in order to provide certainty for providers and suppliers who will be billing Medicare for these products in the near term.”

Meanwhile, the Federal Trade Commission (FTC) recently raised concerns over FDA's draft guidance on biosimilar naming, saying that the naming policy in place could, in fact, have an effect on pricing and price competition. The FTC said that unique suffixes for noninterchangeable biosimilars and their reference products could lead to reduced price competition for biologics. Although this does not directly affect Medicare Part B payment policy, it may have larger implications for biosimilar manufacturers, who may see both the naming issue and the reimbursement policy as disincentives for biosimilar development.

When CMS originally proposed its reimbursement plan for biosimilars, the rule sparked criticism, both from manufacturers and from state senators. A group of senators

CMS postpone the issuing of a formal reimbursement rule until FDA finishes releasing related guidance on them and “biosimilar pipeline stability” has been established. Critics of the rule are concerned that CMS is taking too simplistic an approach for complicated biologics, saying that this approach for products that rely on a common reference product’s biologics license application (BLA) is similar to how average sales price (ASP) is calculated for multiple-source drugs. The opponents add that grouping similar biologics into the same payment calculation is not appropriate, as biosimilars are not technically generic equivalents, and all products may not necessarily share the same number of indications.

The Biosimilars Forum counts more than 80 groups that oppose the rule as it currently stands. The industry group attests that the “law, legislative history, and biosimilar science support the requirement that CMS assign each biosimilar biological product a unique HCPCS [Healthcare Common Procedure Coding System] code.” Bert Liang, chair of the Biosimilars Council and CEO of Pfenex, a biologics manufacturer that has biosimilar products in development, said in an emailed statement that his company remains “concerned that the current proposal will hinder biosimilar uptake and discourage innovation.” The rule is not in accordance with the Biologics Price Competition and Innovation Act (BPCIA), and it is “illogical to tie reimbursement to other molecular entities to which the biosimilar was not initially compared.”

Sources: The Federal Register, the Biosimilars Forum