TABLE 1
Summary of some reimbursement and payment challenges
‘ Rebate trap ’ • Drug manufacturer and health plan rebate arrangements to favorably position the reference product as preferred by payer , forcing practices to purchase the highest cost product
• Specifically , rebate agreements between pharmaceutical manufacturers , pharmacy benefit managers , specialty pharmacies , and insurers may create incentives that favor biologics over biosimilars even when biosimilars are clinically indicated and likely to be cost-saving for patients
• Reimbursement reform that tackles these incentives is in its infancy
Reimbursement
Payers
• Medicare , Medicaid and commercial payers all approach biosimilar reimbursement differently
• In 2016 , the CMS defined a reimbursement structure for biosimilars that included grouping all biosimilar drugs for a common reference biologic under the same billing code (“ J code ”)
• From January 2018 , CMS codes each biosimilar separately with reimbursement on its own average sales price
• Balancing quality of care with reimbursement challenges may have a significant impact on biosimilar versus brand prescribing decisions
Payers ’ decisions on how to reimburse providers for biosimilars and the benefit design affecting patients is likely to be regional and lack uniformity
With the first biosimilar being introduced in the US market in 2015 , today we benefit from an exponentially increasing amount of clinical evidence , which , to date , signals a strong track record for biosimilars in the US and abroad . 3 This includes no evidence of biosimilar market removal due to efficacy or safety concerns . Moreover , with more patients utilizing biosimilars specifically in the extrapolation and product-interchanged setting , we continue to grow the body of real-world evidence that helps us better understand the long-term effects and outcomes in this setting . 4 , 5
Reimbursement and payer challenges Biosimilars have faced strong barriers to market entry globally , but especially in the US . Barriers are encountered during the development and approval processes as well as post-marketing . Examples prior to marketing include patent litigation , prolonging biosimilar availability for months to years , and lack of originator company cooperation providing reference product samples necessary for biosimilar development . 6 , 7 However , the strongest headwinds often times take place post-biosimilar product marketing and these include many barriers such as provider reluctance , insufficient education , lack of payer coverage , reimbursement , operational implementation , and others . According to survey data , biosimilars ’ lack of payer coverage and reimbursement are among the top three barriers to implementation . Table 1 summarizes some of the challenges .
Biosimilars are intended to be market disruptors , with the goal of increasing competition – among reference and other biosimilars – thereby lowering cost . In an attempt to stop or slow down this market evolution , many originator companies have focused their counter strategies on competitive rebating practices that can maintain or elevate payer formulary positioning of their products . These arrangements many times take place on the eve of biosimilar launching . As a result , payer policies may call for utilization of the reference product – at a premium cost to patients and providers – thereby blocking access to lower cost biosimilar ( s ). 6 , 8 Payer formulary positioning is not new ; however , this practice introduces added scrutiny in the biosimilar setting as it can boldly violate the principle of ‘ cost-effectiveness ’ and hinders the general provider commitment to exercise judgment to provide the most effective therapy relative to cost and other factors .
In addition , Medicare , Medicaid and commercial payers have all taken different approaches to biosimilar reimbursement ; making it very challenging for practices to understand the financial implications of a biosimilar adoption prior to implementation . Similarly , postimplementation , many practices lack the ability to dissect claims to accurately assess biosimilar payment . This hinders pharmacy leaders ’ and other institutional proponents ’ ability to make a comprehensive financial case for biosimilar adoption . Notably , however , Medicare has made significant strides optimizing biosimilar reimbursement in order to position biosimilars for success .
For example , in late 2017 , CMS revised its policy regarding reimbursement for biosimilars in Medicare Part B to establish a unique code and reimbursement structure for biosimilars . This allows biosimilars to level the playing field with their reference products and helps ensure the viability of the biosimilars market in outpatient settings by increasing manufacturer confidence in reliable reimbursement . 9 In addition , CMS has extended pass-through benefits to biosimilars , significantly increasing biosimilar effective payment rate relative to the reference product throughout the pass-through eligibility period . Pass-through benefits are intended to support the introduction of new medicines and provide manufacturers of new products an opportunity to familiarize prescribers with their products when those are first brought to market . In the 2015 Hospital Outpatient Prospective Payment System ( HOPPS ) rule , CMS began providing biosimilar pass-through payments to eligible facilities . 9
Today , there are pronounced inconsistencies with regard to payer preference and biosimilar coverage , making it necessary for practices to carry a wide variety of products . This has introduced great logistical challenges for practices from a safety and a product inventory standpoint , but also from
Payer landscape evolution is needed to support a more stable and long-term sustainable biosimilar pharmacoeconomic model
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