The Biosimilar J-Code Jumble

When it comes to the successful future of biosimilars – if you don’t measure it, then it doesn’t count. Unfortunately, the Centers for Medicare and Medicaid Services (CMS) isn’t paying attention.

CMS wants to assign all biosimilars of an innovator drug a single Healthcare Common Procedure Coding System (HCPCS) billing code, called a J-code.  With only a single J-code, a biosimilar’s sole relevant measure for reimbursement would be price.  Unmeasured and thus excluded from reimbursement would be investment in new indications, better quality, less uncertainty, greater reliability and sustained innovation.  No brainer? Not quite.

What the folks at CMS are forgetting is that biosimilars are not generic drugs and are not always interchangeable with the brands they copy.  They are a new category of medicine, similar to the original in safety and efficacy, but different from the brand and each other in important ways. (And since, like generic drugs, there will be more than one copy, it’s important to remember that biosimilars aren’t necessarily similar to each other.) That’s why the FDA is proposing distinguishable naming for all non-interchangeable biologics, an approach with which CMS should be consistent in establishing HCPCS billing codes.

Importantly, any biologic can trigger immune and other reactions due to differences between drugs and patients’ antibody profiles.  In addition, each biologic medicine possesses unique properties and sensitivities in manufacturing and handling.

Every biosimilar must therefore be fully distinguishable in all its names or codes to permit quick and accurate tracing of drugs to its manufacturers.  This includes the HCPCS J-code, which the FDA uses to monitor drugs in its Sentinel Initiative. For an initiative like Sentinel, getting the biosimilars coding right at the beginning is critical.  Data does not reside in a central computer.

Instead, 18 large health insurers and disease registries, as well as 88 hospitals and inpatient facilities, keep their data. Making it possible to pull and study data from each source are standard data categories, including HCPCS J-codes.  This system can be a powerful tool for measuring the performance of each biosimilar, but only if there is a separate J-code. Separate billing codes for biosimilars would facilitate claims-based research encompassing the differences between biologics, including biosimilars.  By not differentiating between biosimilars, the CMS proposal would preclude important inquiries and significantly diminish the utility of the data that is collected.

The unintended consequences of the current CMS position are obvious.  The proposal would dramatically reduce financial incentives for manufacturers to bring biosimilar alternatives to market.  Access to a choice of lower cost biosimilars is important for our patients, especially where an individual patient’s immune reaction may differ between drugs.  In that respect, the CMS proposal is dangerous from a patient safety perspective as well as pennywise and pound-foolish.

Our health care system is so complex that consistency is valuable wherever possible.  In a number of important respects, the CMS proposal is substantially inconsistent with other, closely related laws, policies and processes.

Most significantly, by failing to recognize the inherent differences between generics and biosimilars, the CMS proposal departs from the statute creating the biosimilar regulatory pathway and from the Social Security Act. The latter explicitly provides for separate reimbursement of biosimilars.

In addition, CMS is contradicting its March 2015 ruling that “biosimilar biological products fall within the definition of single source drugs in the Medicaid Drug Rebate program.”  The CMS proposal also makes no provision for the approval of interchangeable biosimilars.  In fact, by treating biosimilars like generics, the proposal comes very close to regarding biosimilars as if they are interchangeable, when they are not.

The new age of biosimilars holds great promise for both lower costs and better health.  However, to deliver on that promise, we need a robust, competitive market based on differentiated benefits, including price.  For that market to thrive, each biosimilar needs a separate HCPCS billing code, with which we can measure its performance.


Peter J. Pitts, a former FDA Associate Commissioner, is President of the Center for Medicine in the Public Interest

Morning Consult