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.
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.