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CMS Issues Guidance on Biosimilar Reimbursement and Formulary Policy

On March 30, the Centers for Medicare & Medicaid Services (CMS) issued two documents on Medicare Part B and Part D payment for biosimilars that are relevant to hematology. On March 6, 2015, the U. S. Food and Drug Administration (FDA) approved filgrastim-sndz (ZARXIO Injection, Sandoz Inc.), as a biosimilar to U.S.-licensed Neupogen, which is important to hematologic therapy. Some of the most important regimens for the treatment of patients with hematologic disorders are biologic, so the release of this information is helpful for the field.

The document related to Medicare Part B payment removes a provision that would result in lower reimbursement rates for physicians prescribing less expensive biosimilars rather than reference biologics. Typically, Part B physician-administered drugs are reimbursed at the average sale price (ASP) plus an additional six percent. In the probable event the ASP for a biosimilar were significantly cheaper, the additional six percent reimbursement would be less for these prescriptions. To fix this, Medicare will pay the ASP of the biosimilar drug plus an amount equivalent to the six percent of the higher-cost reference biologic. Until biosimilars are on the market long enough for an ASP to be established, Medicare will pay 106% of the manufacturer’s wholesale acquisition cost. Lastly, CMS will create separate codes to distinguish biosimilars from reference biologics, but the biosimilar’s distinguishing identification will have no bearing on payment.

The document related to Medicare Part D payment addresses the current formulary requirement that insurance plans offer two distinct drugs in each class. CMS will deal with formulary changes involving biosimilars on a case-by-case basis, unlike when plans replace branded chemical drugs with generic copies. However, the document states that reference biologics and biosimilars “will not be considered as different drugs for the purpose of satisfying the two distinct drugs requirement. Plans must include at least two drugs in each therapeutic category when available.” Even though CMS does not consider biosimilars generic copies of the biologics they reference when seeking FDA approval, the agency does not believe biosimilars are different enough to be considered a separate drug within a drug class. This means that biosimilars could potentially take the place of a reference biologic on a plan formulary. CMS has indicated that it will issue guidance for the interchangeability of biologics and biosimilars at a later date.