CMS Announces Pricing, Policies for Biosimilars Use

Friday, April 10, 2015

Source: FDA News

The Centers for Medicare & Medicaid Services has announced that it plans to begin paying for biosimilars through its Part B, Part D and state coverage policies by this summer.

As with standard drugs, coverage determinations will be based on the manufacturer’s wholesale acquisition cost and the average sales price of the biosimilar, according to a question-and-answer sheet on how biosimilars will be reimbursed under Medicare Part B.

Medicare will pay 106 percent of the wholesale cost of the product until the average sale price can be determined. Once that information is available, coverage will be set at the average sale price plus six percent of the average price for the reference product, CMS says in a Q&A document released last week.

Biosimilars will have different reimbursement codes than those used to denote their reference products. CMS expects to come up with those codes by July 1, with reimbursements applying retroactively to the biosimilar’s FDA approval date — the first of which came last month when the FDA approved Sandoz’s Zarxio (filgrastim-sndz).

The distinct codes are a positive step, as they recognize that biosimilars are not inherently identical to their reference products and will ensure CMS reimburses for them properly, the Biotechnology Industry Organization says.

CMS plans to encourage use of biosimilars and is also encouraging state programs to work biosimilars into their preferred drugs lists as a means of saving money and expanding access to expensive treatments.

Medicare and Medicaid already get rebates from drugmakers, but CMS encourages states to negotiate further rebates directly with manufacturers to drive costs down even lower.

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