The Centers for Medicare and Medicaid Services (CMS) has released another proposal through the Federal Register, which attempts to correct an anomaly in how biosimilars, follow-on biologics, and brands are treated under Medicare part D.
This can be confusing, because CMS treats biosimilars as generics for the purposes of the part D coverage gap. It now wants to ensure that biosimilars are treated as generics in terms of the coverage gap for only those receiving low-income subsidies. Currently, biosimilars are more expensive for patients in the coverage gap compared with originator brands; the new policy could seriously lower overall cost sharing for patients.
Under the policy in place, patients receiving biosimilar therapy who enter the coverage gap are required to pay the same amount as they would for a branded biologic, rather than a generic. This discouraged the use of biosimilars in the coverage gap. The new proposal by CMS rectifies the situation for those receiving the low-income subsidy.
The Affordable Care Act seeks to reduce and eventually eliminate the coverage gap. The 2017 coverage gap begins once a patient has drug expenditures of $3,700 and ends after $4,950. After exiting the coverage gap, beneficiaries pay 5% of total costs. This seems straightforward, but complicating the matter is a provision to help close the coverage gap by 2020. That refers to the Coverage Gap Discount Program, in which drug makers must provide a 50% discount on brand-name products dispensed to Medicare beneficiaries who are presently in the coverage gap. In 2017, the health plan pays 10% of the costs in the gap (this increases through 2020 to 25%), and the beneficiary pays 40% (which decreases by 2020 to 25%). For generics and biosimilars, patients pay 51% of the cost, as CMS assumed that the prices of these would be far lower than that of brands. This is not the case with biosimilars, however; patients in the coverage gap would actually pay more for a part D biosimilar than for a brand until the coverage gap disappears.
Under the new proposal, CMS would “revise the definition of generic drug at § 423.4 to include follow-on biological products approved under section 351(k) of the PHS Act (42 U.S.C. 262(k)) solely for purposes of cost-sharing under sections 1860D-2(b)(4) and 1860D-14(a)(1)(D)(ii-iii) of the Act. Lower cost sharing for lower cost alternatives will improve enrollee incentives to choose follow-on biological products over more expensive reference biological products, and will reduce costs to both Part D enrollees and the Part D program.” This proposal is specific only to non-low-income subsidy beneficiaries’ catastrophic care (i.e., beyond the coverage gap threshold) and all low-income subsidy beneficiary cost sharing.
The real impact of this new policy on biosimilars will not be known for some time. After a comment period ends in January, implementation can take some time (perhaps around the time the coverage gap is closed). More pragmatically, no part D biosimilar is currently marketed (infliximab and filgrastim are reimbursed under part B). Follow-on biologics, such as insulins or growth hormones, are generally covered under part D, and the policy applies to these agents as well.