Groups Concerned Over CMS Biosimilar Payment Rule

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By Bronwyn Mixter

Sept. 9 — In recent comments to the CMS, diverse groups said the proposed rule on Medicare reimbursement for biosimilars would discourage innovation, erect barriers to developing biosimilars and create safety issues due to the inability to differentiate between biosimilars and reference (brand) products.

The groups commenting included the biologics industry, chain drug stores, patients and health insurers.

The Centers for Medicare & Medicaid Services released a proposed rule (CMS-1631-P) in July that assigns all biosimilars of a single reference product one Healthcare Common Procedure Coding System (HCPCS) code and would reimburse biosimilars with the same HCPCS code based on the weighted average of their average sales price under Medicare Part B.

Comments on the proposed rule (CMS-1631-P) were due Sept. 8. The CMS will consider the comments as it works on the final version of the rule.

The Affordable Care Act, through its Biologics Price Competition and Innovation Act, created an abbreviated pathway for the Food and Drug Administration to approve biologic products shown to be similar to, or interchangeable with, an FDA-licensed biological reference product. The FDA approved its first biosimilar drug in March. That biosimilar, Zarxio, is a product of Sandoz (part of Novartis) and is a version of the Amgen cancer drug Neupogen (filgrastim). Sandoz launched the biosimilar product on Sept. 3 .

Biologic Industry's Objections

The Biosimilars Forum said it “strongly” disagrees with grouping all biosimilar products of a single reference product under the same HCPCS code.

“We urge CMS to enact a final payment rule that assigns each biosimilar product of a reference biologics its own payment amount and a unique HCPCS code,” the forum said.

The Biosimilars Forum also said that the CMS's interpretation “inappropriately treats biosimilar products as if they were multisource or generic drugs,” which is inconsistent with how the FDA classifies biosimilars and how the CMS itself defines biosimilar products under Medicaid and Medicare Part D.

“Finally, CMS's proposed payment methodology is likely to dramatically reduce investment in, and the subsequent availability of, biosimilar products, which is clearly the intent of Congress in providing for a vibrant U.S. biosimilars market,” the forum said.

Founding members of the nonprofit Biosimilars Forum represent the majority of companies with the most significant U.S. biosimilars development portfolios: Actavis, Amgen, Boehringer Ingelheim, Coherus BioSciences, EMD Serono, Hospira, Merck, Pfizer, Samsung, Sandoz and Teva.

In separate comments, the Biotechnology Industry Organization (BIO) said it also doesn't support the proposed reimbursement policy, which would make it difficult for prescribers, patients and Medicare contractors to distinguish between biosimilars using the same reference product.

BIO said it urges the CMS to reimburse each biosimilar based on its own average sale price (ASP), consistent with the methodology currently employed for all single-source products, and to establish a unique HCPCS code for each biosimilar product.

Drug Stores Weigh In

The National Association of Chain Drug Stores (NACDS) said it strongly discourages the CMS from including noninterchangeable biosimilar products in a single reimbursement code. The group said this would “create access barriers for patients at the pharmacy counter, would lead to increased costs to the system and would result in inadequate reimbursement for pharmacies.”

“If CMS moves forward with this reimbursement policy it should clearly state that only interchangeable products will be included in the reimbursement calculation,” the NACDS said. “However at this time, NACDS would recommend that CMS delay implementing a reimbursement policy” until the FDA issues its final guidance for interchangeable products.

Because the FDA hasn't issued a final guidance, “it may be premature and inappropriate for CMS to comment on the reimbursement of interchangeable biosimilars,” the NACDS said. “The complex nature of biologicals warrants a cautious, balanced approach and CMS should defer until clear standards are in place that will give patients and healthcare professionals confidence in the biosimilar and interchangeability designations.”

Health Insurer's Comments

Anthem Inc., the third-largest health insurer in the U.S., said the proposal “would do little to encourage market competition between Part B biologic and biosimilar manufacturers.”

“Rather, the approach encourages shadow pricing among manufacturers, which would likely restrict the cost savings that stakeholders are anticipating upon launch of multiple biosimilars to a reference product,” Anthem said.

Anthem also said the proposal “would provide little market incentive for manufacturers of biosimilars to invest in the development of these products, as their payment will be volume-weighted and, depending upon the market share of other biosimilar competitors, significantly dependent upon the price of other products that have prior market approval.”

Biosimilars are unlike generic drugs “in that they are large-molecule products that require a substantial amount of safety testing and tracking in relation to their manufacturing process,” Anthem said. “A single biosimilar drug from even the same manufacturer can vary in exact composition. As a result, insurers and providers need a process to track individual biosimilars via physician claims, for both safety purposes as well as to support other analyses and direct engagements with manufacturers.”

Anthem said the CMS should assign a unique HCPCS code for each biosimilar to a single reference product.

“This methodology would better encourage pricing competition and is more likely to achieve savings under the Medicare program,” Anthem said. “In addition, Anthem encourages CMS to continue use of the existing NDC [national drug code] process for tracking biosimilars.”

Cancer Action Network's Views

The American Cancer Society Cancer Action Network (ACS CAN) said the proposed biosimilar reimbursement policy “has the potential to significantly impact the development and success of this fledgling market, and we urge caution to avoid enacting policies that could result in the unintended consequence of discouraging biosimilar development.”

The group said it believes that biosimilars “may offer potential for increasing accessibility to, and affordability of, effective cancer therapies.”

ACS CAN said that current FDA policies don't require biosimilar manufacturers to obtain approval of all the same indications that are applicable to the branded reference product. The CMS proposed policy wouldn't “allow differentiation from a reimbursement standpoint between drugs with different FDA-approved indications and we question whether this might encourage prescribing practices inconsistent with the approval status of a biosimilar,” the group said.

To contact the reporter on this story: Bronwyn Mixter in Washington at

To contact the editor responsible for this story: Fabia Mahoney at

The comments are available at under the docket number CMS-2015-0081.

The proposed rule is at