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Could Biosimilar Reimbursement Policy Jeopardize Patient Care?

December 29, 2015

In a recent letter sent to Senate Finance Committee Chairman Orrin Hatch (R-UT), several advocacy groups representing physicians who often prescribe biologics expressed their concern about the recent decision by the Centers for Medicare and Medicaid (CMS) to lump all biosimilars of the same reference product into a single Healthcare Common Procedure Coding System (HCPCS) billing code.

In November, CMS finalized its 2016 Medicare Physician Fee Schedule, which, to the frustration of the physician groups, bases Medicare Part B reimbursement on the weighted average of sales prices on an individually shared HCPCS code. The groups want individual HCPCS billing codes for each biosimilar deemed not interchangeable with the reference product by the U.S. Food and Drug Administration (FDA).

“We write to express our serious and continuing concerns with the CMS decision,” stated the groups. “We urge you and other members of Congress to direct CMS to adhere to current law that states that the calculation for reimbursing biosimilars shall be made separately.”

They also noted that a single HCPCS billing code and reimbursement rate for all biosimilars of a single reference product seriously jeopardizes their principles of patient-centered care and clinically sound prescribing practices.

Last October, Mr. Hatch sent a letter to CMS Acting Administrator Andrew Slavitt imploring CMS to forgo finalizing the proposed plan to include all biosimilars of the same reference product into a single HCPCS billing code. He said moving forward with the proposed plan would discourage manufacturers from developing biosimilars when the market is still evolving.

“Biosimilars hold great promise for achieving positive health outcomes while reducing the cost to Medicare, other payers, and patients,” wrote Mr. Hatch. “It makes little sense to erect barriers to a market that has yet to materialize.”

Mr. Hatch questioned assigning biosimilars of the same reference product to the same HCPCS code because the FDA might approve biosimilars for conditions that differ from those the reference product is indicated to treat. He also noted that a single HCPCS code would hamper the tracking of individual biosimilars that’s needed to further patient safety and continued research. His letter echoed the physicians’ concerns that the final payment policy ignores the language of Obamacare’s Biologics Competition and Innovation Act.

Some experts believe CMS has inappropriately interrupted the text. “I find it difficult to make that argument,” said Tara O’Neill, a healthcare policy analyst with the American Action Forum in Washington, D.C. “Regardless of Congress’s intent, CMS has interrupted the law as they have. Congress will ultimately have to change the law if it’s a bad economic policy that will harm patients.”

Working toward that legislative fix will take time, noted Ms. O’Neill. In the meantime, she said the main concern among stakeholders should be determining how the current reimbursement policy affects patient care, which is impacted by the abilities of biosimilar manufacturers to invest in innovation and the production of more products.

Reimbursing all biosimilars for a single reference product at the same price point does not account for differences in quality, value, or cost of production, pointed out Ms. O’Neill. “That’s particularly important given that a biosimilar is not required to treat all of the reference product’s indications,” she added. “Presumably the drugs that treat more indications would cost more to produce and have higher values.”

Ms. O’Neill said focusing only on price could cause a downward spiral in quality care that eventually forces higher value manufacturers to exit the market, which would ultimately lead to fewer treatment choices involving lower quality products.


—Dan Cook


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