House Subcommittee Upset With Feds' Biosimilar Performance

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By John T. Aquino

Feb. 4 — House subcommittee members Feb. 4 didn’t let up during a hearing in criticizing top agency officials on the pace at which the FDA is approving biosimilars and how Medicare plans to reimburse for them.

Members of the House Energy and Commerce Subcommittee on Health kept asking officials from the Food and Drug Administration and Centers for Medicare & Medicaid Services if the two agencies had ever talked about the differences between generics of small-molecule drugs and biosimilars of large-molecule biologics.

Members were especially concerned about the impact of the CMS’s Medicare Part B payment policy that would combine all biosimilars into one average sales price calculation and payment code, similar to how the agency reimburses for generics.

Rep. Joe Barton (R-Texas), who co-authored the Biologics Price Competition and Innovation Act (BPCIA), said, “As to how you’ve been doing with biosimilars, I would give FDA a C plus, maybe a C minus, and CMS a D. The only reason I haven't given you an F is because you're trying, you got something out there.”

Witnesses at the hearing, titled Examining Implementation of the Biologics Price Competition and Innovation Act, included Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, and Sean Cavanaugh, the CMS's deputy administrator and Center for Medicare director.

CMS Reimbursement Policy

Medicines known as biologics consist of larger molecules and are generally more difficult to characterize and manufacture than chemically derived, smaller-molecule drugs, and therefore more expensive to produce. And because of their complexity, a biosimilar, unlike a generic of a small-molecule drug, will never be exactly the same as the reference product.

The BPCIA, which was part of the Affordable Care Act, authorized the FDA to approve a biosimilar if it is determined to be highly similar to a previously licensed reference product.

If an application shows that, in addition to meeting the biosimilarity standard, the medicine can be expected to produce the same clinical result in any given patient, the FDA can approve it as being “interchangeable” with the reference product.

In November 2015, the CMS published final rules setting the stage for how the Medicare program will reimburse for biosimilar products. The new policy pays for biosimilars based on average sales price, using 6 percent of the reference product price as the add-on, and groups all biosimilars that share the same reference product, with each product being reimbursed under the same code.

Criticism for CMS's Policy

The new regulations were immediately criticized by the Biosimilars Forum, the Alliance for Safe Biologic Medicines, the Pharmaceutical Research and Manufacturers of America and the Generic Pharmaceutical Association .

Subcommittee members at the hearing joined in the criticism, with Rep. Frank Pallone Jr. (D-N.J.) saying, “I worry that this inappropriately treats biosimilars like generic drugs and will disincentivize manufacturers from entering the biosimilars marketplace. Biosimilars are not generics. Each is its own unique product, and biosimilars go through a much more stringent approval process.”

Pallone added that Medicare Part D and Medicaid both acknowledge the difference between biosimilars and generics in their programs.

Statutes Said Inconsistent

Barton asked Cavanaugh, “Do you understand that biosimilars are different from generics?”

Cavanaugh said, “From a clinical perspective, CMS knows that biosimilars are not the same as generics. From a regulatory perspective, there are similarities. Consequently, we created similarities as to how biosimilars and generics are priced, but there are differences as well. Biosimilars will repeat the same billing code but will have a modifier distinct for each manufacturer.”

Responding to Pallone's comment about the different ways biosimilars are treated in Medicare Part B, Medicare Part D and Medicaid, Cavanaugh said that biosimilars are paid for from different programs, there are different statutes for different programs and there are inconsistencies among statutes.

CMS Footdragging

Rep. Larry Bucshon (R-Ind.), who is also a physician, told Cavanaugh that the CMS is making decisions for financial reasons and not because of medical benefit.

“These are products that are approved by FDA, by agencies all over the world, and they are being reimbursed by private insurers. Once they are approved for having shown safety and efficacy, why is CMS dragging its feet on these biosimilars or putting up a price that is so uncompetitive the company that makes them can't afford to stay in the marketplace?”

He added, “In my view anything that is approved by the FDA should be available to the American people.”

FDA Won't Sacrifice Performance

In a question to the FDA's Woodcock, Barton said the “subcommittee is concerned about implementation or lack thereof of the BPCIA, since only one biosimilar—Zarxio—has been approved. We agree that it's important for FDA to get it right, but we feel it's time they get on down the road.”

Woodcock said, “We've seen a lot of progress since 2010, although most of it has been under the hood. We did approve the first biosimilar in 2015, and on Feb. 9, 2016, FDA’s Arthritis Advisory Committee is scheduled to hold a meeting to discuss a proposed biosimilar to Remicade (infliximab), a biological product licensed by FDA to treat conditions such as rheumatoid arthritis, ulcerative colitis and Crohn’s disease.”

She said that life sciences companies and patients are anxious to see more progress, and that she understands why. “But while small molecule generics have been very successful, that didn't happen overnight. It required acceptance of the medical community. Now, they do save the country a lot of money.”

She added, “For biosimilars and interchangeables, the FDA must apply rigorous standards. Biologics are life-changing, and we don't intend to sacrifice on their performance with biosimilars.”

FDA Always Playing Catch-Up

Pallone asked Woodcock if the way Congress funded the FDA to handle biosimilars has been a problem in reviewing and approving them.

“Congress didn't appropriate any additional funding to the FDA to implement BPCIA,” Woodcock said. “We took money from other activities. We have begun to collect more money under the user's fee program—$23 million in 2015—so hopefully biosimilars will have more robust funding. If we had had more from the get-go, it would have been easier. And as more biosimilar applications come in, I am concerned that we will not have the staff because we always seem to be waiting to catch up.”

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

To contact the editor responsible for this story: Lee Barnes at

For More Information

Request Health Care on Bloomberg Law