The 340B Rebate Pilot Program could give biosimilar makers a needed boost, as they lose revenues to the profit incentive of eligible covered entities.
The 340B program has been a barrier for biosimilar products being dispensed in outpatient facilities. Forbes sites that branded drugs account for approximately 90% of 340B pharma sales, compared with 78% of non 340B drug sales. As we reported earlier this year, there is a significant reduction in biosimilar use among 340B eligible entities. This makes sense because the entity can purchase the drug at the 340B price and get reimbursed by payers at the far higher WAC price. This has been a proven profit driver for health systems and hospital networks.
However, if the covered entity is forced to pay full price upfront for a biologic product with biosimilar competition, it may be much more inclined to seek out the lower cost of the biosimilar. This would make more sense than to take on the risk of obtaining a rebate later, if the entity is found to be truly eligible for the 340B discounted purchase. Under the new Health Resources and Services Administration’s (HRSA’s) 340B rebate pilot, the rebate to make up the difference between the WAC cost and the 340B price would only be paid retrospectively, after approval of the transaction.
Hoping to implement the pilot on January 1, 2027, HRSA will first apply it only to products that are subject to existing Medicare maximum fair price (MFP) agreements. Therefore, the number of biosimilars affected over the short term is very low, really only to adalimumab and ustekinumab, which are generally available as self-administered products. Yet, the breadth of the program could be expanded with the coverage of additional MFP-eligible products in the future. This can certainly have implications for the next generation of oncology biosimilars, such as Keytruda and Opdivo, as well as any other infusible biologics that are to face biosimilar competition.
On the other hand, a bipartisan legislative proposal introduced on August 5 by Senator Tammy Baldwin (D-WI) and Senator Jerry Moran (R-KS) would retain the upfront discount that 340B-eligible entities currently utilize, and stop the HRSA pilot within a year of implementation. This would not significantly change the outlook for biosimilars should these heavily lobbied proposals find their way into signed law.
The objective of any 340B reform is to wrangle an out-of-control pharmaceutical financing program, protect legitimate higher-price sales by the drug industry, and reallocate the program’s true benefits back towards safety net institutions. For-profit entities that were squeezing profits from the 340B program can simply purchase lower-cost biosimilars from the outset, and benefit from their deep savings instead.
This article was written by our Director of Content, Stanton Mehr. Stan has been writing commentary and reporting news about the biosimilar industry since the submission of the first biosimilar 351(k) application to the FDA 13 years ago. Since that time, BR&R has been tracking the US biosimilar marketplace, with the industry’s original, comprehensive and updated database of biosimilar filings with the FDA.Â
