Biosimilars and Shared-Savings Programs

Shared-savings programs have been used by the Centers for Medicare and Medicaid Innovation (CMMI) to leverage financial incentives for providers into lower costs for Medicare. In the last 2 months, this idea has been floated to improve access to biosimilars–a biosimilar shared-savings program for Medicare Part B.

There is ample evidence that biosimilars in general are less expensive than their reference products. The introduction of a biosimilar agent end the price hikes associated with unopposed reference biologics. In addition, Bernstein Research demonstrated convincingly that biosimilars lower the average sales price of reference agents in their category by around 12% per year. After a couple of years on the market, the costs in the category are lowered substantially.

Lower prices are the objective—a partial objective anyway. Greater utilization at those lower prices will result in the real savings. Gaining that utilization by providers and coverage of the payers continues to be a concern, although many inroads are being made in those areas. One way of addressing this issue is to lower patients’ out-of-pocket cost for biosimilars relative to the innovator product. Another approach is to incentivize physicians financially to prescribe them over the reference biologic. A “shared-savings” approach has been recently raised to increase physicians’ incentives to prescribe biosimilars.

I understand how existing shared savings programs work in Medicare and how other value-based reimbursement models generally function in health care, but I’m still trying to figure out how this may apply to biosimilar utilization. Alex Brill, of Matrix Global Advisors and the American Enterprise Institute, published a white paper on how a biosimilar shared savings concept might work for Medicare Part B. A legislative proposal was introduced by Senators John Cornyn (R-TX) and Michael Bennet (D-CO) on July 1. Entitled the Increasing Access to Biosimilars Act of 2020, it relies heavily on shared-savings principles, though the full text of the bill was not yet available for viewing at the time this article was written.

Alex Brill biosimilar shared-savings programs
Alex Brill

Mr. Brill emphasizes in his white paper these principles must be kept simple in order for it to be accepted by e (and by providers). The Biosimilar Forum is fully on board with that idea, sponsoring the white paper and being mentioned in Senator Cornyn’s press release. I’m struggling with the idea. I guess I’m just a little thick.

A Shared-Savings Model on Top of Another One?

Currently, 14 of the 17 biosimilars marketed in the US are indicated primarily for cancer treatment (direct and supportive). Medicare’s Oncology Care Model is an ongoing value-based demonstration project (set to end in 2021) that focuses on the episode-of-care payment to practices for each patient receiving cancer care. It also relies on shared savings, offering performance bonuses for those practices that save money overall. This applies to the total cost of oncology care, not one component of it. One might expect that use of lowest cost medication would contribute towards low provider costs, giving the practice or medical group the best chance for receiving the savings bonus.

Limiting a shared-savings initiative to specific drug treatment within a disease state may seem overly complex and even counterintuitive. Does this narrow application actually make it easier to track and award bonuses? I’m not sure.

Beyond the oncology space, only infliximab and epoetin biosimilars remain (not counting rituximab, which could potentially be used for oncology and autoimmune indications). Considering the various physicians who might be prescribing infliximab, including rheumatologists, gastroenterologists, dermatologists, these agents are a singular, but significant, portions of their practice if they continue to purchase them on a buy-and-bill basis. Would they be interested in a shared savings program based on a singular drug?

Medicare Part B reimburses physicians for the use of individual pharmaceuticals based on the reference product’s average sales price (ASP). Payment is ASP plus 6%, for instance, whether a reference or biosimilar is administered. Essentially, it places these agents at parity; it does not advantage the biosimilar. It does improve upon earlier methodology, which gave a distinct reimbursement advantage to the reference product.  

Strength in Numbers

Differential cost sharing for biosimilars versus innovator products could be offered by payers, but this is not widespread because (1) there are still relatively few biosimilars available to justify a big policy change and (2) the currently marketed biosimilars are generally covered under the medical benefit. Under the pharmacy benefit (i.e., Part D), different copay tiers are well accepted, and it would be relatively easy to start a “biosimilar-only” tier. A few commercial payers prefer the use of biosimilars, but a larger share simply offer biosimilars on a level playing field, which leaves the decision up to the physician and patient.

Not knowing the exact content of the legislative proposal, I hesitate to hazard a guess as to its individual steps. Judging from the positive response from the Biosimilars Forum, it may contain elements outlined in the Brill paper. In either case, the challenges of implementing such a model will be:

  • Creating a meaningful savings that will prompt quick action from physician groups and health systems
  • Encouraging payers (i.e., Medicare Advantage plans) to get on board—think buy-and-bill versus specialty pharmacy
  • Offering patients financial incentives as well as provider benefits
  • Avoiding confusion with the goals and methods of the oncology care model (even if this demonstration project does not become permanent)
  • Being extremely easy to administer for payers and Medicare fiscal intermediaries as well as easy to monitor for physician groups

The problem of taking advantage of the lower health expenditures afforded by the presence of biosimilars remains. New ideas for improving biosimilar access and utilization will always be welcome. Making them work is another matter.

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