CMS Guidance on Biosimilar Reimbursement is One of Many Expected in 2015

By Kathleen P. Wolff, MBA

On Mar. 30, 2015, the Centers for Medicare & Medicaid Services (CMS) issued important new guidance on biosimilar reimbursement. Not only was the guidance itself noteworthy, it comes less than a month from the decision to approve the first biosimilar in the U.S. and is among the first of a wave of decisions expected this year in this rapidly evolving sector.

Steve Miller, MD, Chief Medical Officer for Express Scripts, worked directly with CMS on the recent guidance. “This is just one among many new developments expected to emerge following FDA’s approval of the first biosimilar last month,” he said, referring to filgrastim-sndz, (Zarxio, Sandoz) approved by FDA on March 6, 2015.

Dr. Miller has taken a lead role in the promotion of legislation to create a regulatory pathway for biosimilars in the U.S. His comments came Friday during an interview with Specialty Pharma Journal, a partner in the upcoming ‘Biosimilars 20/20’ conference in Philadelphia this June where Dr. Miller will be a featured speaker. “By summer, we can expect that many issues will have to be decided, now that a biosimilars product is entering the market,” he said.

The developments indicate new era in biosimilar development and use in the United States, which has lagged significantly behind the rest of the world. The approval of Zarxio last month comes five years after the Biologics Price Competition and Innovation Act of 2009 was passed as part of the Affordable Care Act, which was signed into law in 2010. And it comes nearly a decade after the first biosimilar product was approved in Europe.

Upcoming decisions are expected to have profound consequences for the marketplace for biosimilar drugs. For example, the CMS guidance on reimbursement issued on March 30 effectively takes away the financial incentive from doctors to prescribe the more expensive innovator products over their biosimilar counterparts.

Until now, biosimilar products, which typically have a much lower price, would result in a significantly lower reimbursement to the doctor. Physician-administered drugs under Part B are usually reimbursed at the average sales price (ASP) plus 6%.  But in last week’s guidance, CMS leveled the playing field, writing “once ASP information is available for the biosimilar product, Medicare payment will equal the ASP for the biosimilar product plus 6% of the ASP for the reference product.”

In other words, the reimbursement to doctors will now be the same, whether they prescribe the biosimilar or innovator product.

Additionally, now that a biosimilar product is poised to enter the marketplace, other decisions must soon be made. One issue requiring attention is the naming conventions for biosimilar drugs. At issue is whether each biosimilar must be identified in a name specific to its manufacturer.

In its recent guidance, CMS also said that it plans to create a separate code that will differentiate the biosimilar product from the innovator product. However, CMS says that these identifiers, such as the “sndz” which is part of the name filgrastim-sndz will “have no bearing on coding and payment.”

In addition to the regulatory developments, legal developments are also expected to emerge in 2015. While FDA has given Sandoz the green light to move ahead with Zarxio, pending legal action still threatens to delay the drug’s market release this spring.

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