It’s Time to Change the CMS Biosimilar Coding Rule

As we near the end of 2017, President Donald Trump and his staff have a rare opportunity to advance a policy that meets all their priorities: fostering new jobs and industry, lowering drug costs and improving patient access to Food and Drug Administration-approved life-saving medications.

This opportunity can only be realized with the support of the Centers for Medicare and Medicaid Services reimbursement and payment policy for biosimilars.

In a 2015 Government Accountability Office report on Medicare Part B spending, biologic drugs accounted for 13 of the top 20 highest expenditure new Part B drugs and 82 percent of expenditures for the overall top 20. From 2006 to 2013, 61 percent of the 83 new drugs approved by the FDA were biologics and in 2016 biologics represented 8 of the 10 best-selling drugs in in the United States. With prescription drug costs in this country rising even further, biosimilars have great potential to lower costs and improve patient access to life-saving medicines.

In the United States, RAND Corp. estimates that biosimilars will lead to a $44.2 billion reduction in direct spending on biologics by 2024. The United States can also draw insights from10 years of experience in Europe, in which between 2006 and 2014, biosimilars increased patient access by 44 percent overall in five of the European Union’s countries (EU5: France, Germany, Italy, Spain and the United Kingdom) and savings in eight European countries are projected to be between $11.8 and $33.4 billion euros by 2020.

In a nutshell, the current CMS Medicare Part B policy incorrectly assigns a reimbursement and coding policy of “sameness” to all biosimilars when the FDA does not. FDA regulations dictate that each biosimilar can vary from each other in the number of approved clinical indications for their reference product. The current CMS Medicare Part B biosimilar policy assigns the same Healthcare Common Procedure Code, or “J Code,” to all FDA biosimilars approved for the same reference biologic. The failure of the current CMS policy to align with the FDA biosimilar regulations creates a patient safety risk and discourages investment in the development of biosimilars.

Just last month, FDA approved Boheringer Ingelheim’s Cyltezo biosimilar of Humira for a different number of clinical indications than Amgen’s Amjevita biosimilar of Humira, which was approved last year. Per FDA guidelines, each biosimilar is a unique single-source drug with different approved clinical uses. Although FDA approved these products differently, CMS has applied the same root HCPCS code to them and will reimburse the products at the same rate. To avoid potential prescribing errors and patient safety risks, CMS should align with the FDA policy.

In addition to creating patient safety risks, the CMS policy discourages development of biosimilars. Due to their complexity, biosimilars require significant time and investment to develop. The Federal Trade Commission estimates that biosimilar products typically take 8-10 years to develop, with associated costs ranging from $100 to $200 million. The number of indications for which a product is developed and approved affects overall costs. Alignment between CMS reimbursement policy and FDA biosimilar regulations will support investment and provide developers with a sense of stability for the future biosimilars marketplace.

Moran Co. report shows how the current CMS policy discourages biosimilar manufacturers from pursuing the expensive process of developing more complex biosimilars, which will hurt competition and decrease cost-saving potential.

Although the problem is not simple, the solution is: Change the CMS policy to give unique reimbursement and codes to each biosimilar in alignment with FDA regulations. This will prioritize patient safety, prevent medication errors, and encourage development of biosimilars, leading to a new industry, competition, and lower drug costs.

With three biosimilars currently on the market in the United States and more than 60 biosimilars in development, now is the time to correct this important foundational policy for biosimilars in this country.

I urge the president and his team to support CMS in making this policy change now.


Juliana M. Reed is senior vice president for government affairs at Coherus BioSciences Inc.

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