So far, the US FDA has only approved one biosimilar – Sandoz’s Zarxio – but more are expected from Apotex, Hospira, Sandoz, Celltrion and others.
As far as payments and discounts, CMS, which usually sets prices that serve as a base for what private health plans set, says it will incorporate approved biosimilars into the Average Sales Price (ASP) payment methodology and issue additional guidance as necessary.
“Initially, once the manufacturer’s wholesale acquisition cost (WAC) is available, Medicare will pay 106 percent of the WAC for the product until ASP information is available. Once ASP information is available for this biosimilar product, Medicare payment will equal the ASP for the biosimilar product plus six percent of the ASP for the reference product,” thereby incentivizing the prescribing of biosimilars, CMS says.
The agency said it also expects biosimilars to be priced 15-30% lower than reference products, which is in line with previous industry estimates.
In addition, biosimilars may be added to plan formularies at any time as a formulary enhancement, CMS says. Formulary changes involving the addition of the biosimilar and removal of the reference biological product “will generally be considered a non-maintenance change.”
State Use
As nearly 10 states have now enacted legislation around the substitution of biosimilars by pharmacists -- which probably won’t occur until there’s a biosimilar on the US market for AbbVie’s rheumatoid arthritis blockbuster Humira -- the federal agency also calls on state Medicaid programs to view the launch of biosimilars “as a unique opportunity to achieve measurable cost savings and greater beneficiary access to expensive therapeutic treatments for chronic conditions.”
And like the FDA, CMS plans to distinguish between biosimilars and their reference products. CMS will do so by creating a separate code. “CMS is considering policy options for coding of additional biosimilars, and will release further guidance in the future,” the agency said.
CMS further suggests that states use their drug utilization review programs and pharmacy and therapeutics committees to inform physicians and pharmacists about the appropriate prescribing and dispensing of biologics and biosimilars, especially in terms of FDA’s designation of interchangeability.
As far as educating physicians and pharmacists on how to prescribe and dispense cost-effective biosimilars, CMS says it’s “important to encourage and maximize their use. That is because, in contrast with traditional drugs, a prescriber may not be able to simply write the proprietary name of a reference biological product and expect the pharmacist to substitute it with the biosimilar biological product. The prescriber may have to write the proprietary name of the biosimilar biological product, or the product or proper name of the biosimilar biological product as found in the FDA's Purple Book.”