Medicare Advisers Support Easing Access to Biosimilar Drugs

BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...

By John T. Aquino

Oct. 7 — A group of Medicare policy advisers Oct. 7 appeared to strongly support removing barriers to the wider use of biosimilar drugs.

At their meeting, members of the Medicare Payment Advisory Commission noted that some incentives and discounts that are available under Medicare for use of brand-name, or reference, biologic drugs can make them seem less expensive than biosimilars, which are supposed to be a lower-cost alternative.

Solutions the commissioners discussed were extending to biosimilars the coverage gap discount that currently applies to branded/reference biologics, and ensuring that plan incentives encourage the use of lower-cost products. MedPAC advises Congress on Medicare pay policies.

No Longer Hypothetical

“This is no longer hypothetical,” said MedPAC Commissioner Jack Hoadley, a research professor at the Georgetown University Health Policy Institute.

He said, “Unlike the situation where this was discussed in previous years, biosimilars [now] have been approved by the Food and Drug Administration. They're out there. And our goal is to see how to make it easier for consumers to access biosimilars without all the hoops that have currently to be gone through today.”

So far, the FDA has approved four biosimilars under a 2010 law that created a pathway for such approvals. According to the FDA, a biosimilar product is a biological product that is approved based on a showing that it is highly similar to an already approved biological product, known as a reference product.

Expensive Drugs, Possible Savings?

MedPAC staffers Rachel Schmidt and Shinobu Suzuki noted in a presentation for the commissioners that biologics are large-molecule therapies synthesized from living cells or organisms, in contrast to chemically derived drugs. Biologics are used to treat diseases such as diabetes, rheumatoid arthritis and multiple sclerosis.

Schmidt said insulin makes up the largest share of gross spending for biologics in Medicare Part D—60 percent—and biologic prices are typically high. Nationwide, they represent less than 1 percent of the prescriptions but 28 percent of the spending and have a faster spending growth than most medications, she said. Part D is the outpatient drug benefit for Medicare.

“High prices and spending growth raise concerns for Medicare Part D, specifically about beneficiary out-of-pocket costs and access and the Medicare program's financial sustainability,” Schmidt said.

Biosimilars are expected to reduce costs, Schmidt said.

On further review by the FDA, the biosimilar can be designated as interchangeable with the reference product (RP), which means that a pharmacist could substitute the biosimilar with the RP without a physician's approval. To date, the FDA hasn't approved an interchangeable biologic drug, only biosimilar drugs.

Analysts expect 20 percent to 40 percent lower prices for biosimilars, which will vary by product and over time, Schmidt said.

Problems With Take-Up

According to Suzuki, market acceptance or take-up of biosimilars will depend on patients' and prescribers' perceptions about safety and effectiveness—concerns about immunogenicity (immune response), interchangeability and naming conventions—and how Part D law and Centers for Medicare & Medicaid Services regulations are applied to biosimilars.

One issue concerning the law and regulations, Suzuki noted, is that the low-income subsidy (LIS) copayment amounts are exactly the same for reference biologics and biosimilars, so there's no incentive to switch.

Another issue concerns the Medicare coverage gap, also known as the doughnut hole, which is the period of consumer payment for prescription medication costs that lies between the initial coverage limit and the catastrophic-coverage threshold. Copayments made by the consumer up to the point of entering the gap and until he or she makes enough payments to leave the gap are specifically not counted toward payment of the costs accruing while in the gap.

The coverage gap discount program (CGDP), which was created to ease this problem for consumers, requires manufacturers to provide a 50 percent discount on brand drugs dispensed during the coverage gap. Both the manufacturer’s 50 percent discount and the beneficiary’s out-of-pocket costs count toward true out-of-pocket costs (TrOOP).

The CGDP doesn't apply to biosimilars in the coverage gap, Suzuki said.

Commissioners Support Changes

The commissioners expressed strong support for changes that will make it easier for patients to access biosimilars through Medicare.

“I completely support applying the coverage gap discount to biosimilars,” said Rita Redberg, a cardiologist and professor of medicine at the University of California at San Francisco Medical Center.

Hoadley noted, “A lot of the pricing in the field is based on rebates, but a patient's cost is based on a pre-rebate price. Can some of that rebate be shared with the patient?”

Hoadley did, however, advocate some caution. “Changes absolutely have to be made. But we do have to acknowledge that biosimilars are not identical to the reference biologic product. I think we have to think through the right policy, work through the consequences.”

Leigh Purvis, director of health services research, AARP Public Policy Institute, told Bloomberg BNA, “The savings associated with biosimilars will be integral to ensuring that patients have access to affordable prescription drugs, as well as the financial sustainability of Medicare Part D. Accordingly, AARP is concerned by Part D laws and regulations that could negatively impact biosimilar utilization and strongly supports MedPAC’s efforts to find solutions.”

To contact the reporter on this story: John T. Aquino in Washington at

To contact the editor responsible for this story: Brian Broderick at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.