Centers for Medicare and Medicaid Comments on Biosimilars

August 28, 2017

Centers for Medicare and Medicaid
Department of Health and Human Services
P.O. Box 8016
Baltimore, Maryland 21244-8013

Re: Docket No. CMS-2017-1676-P
Payment for Biosimilar Biological Products under Section 1847A of the Social Security Act

     Citizens Against Government Waste (CAGW) is a private, nonpartisan, nonprofit organization representing more than one million members and supporters nationwide. CAGW’s mission is to eliminate waste, mismanagement, and inefficiency in government. Founded in 1984 by the late industrialist J. Peter Grace and syndicated columnist Jack Anderson, CAGW was created to follow up on the report of the President's Private Sector Survey on Cost Control, also known as the Grace Commission.

     CAGW appreciates the opportunity to submit comments on the Centers for Medicare and Medicaid Service (CMS) Docket No. CMS-2017-1676-P, Payment for Biosimilar Biological Products under Section 1847A of the Social Security Act.

Comment

     CAGW is concerned the nascent U.S. biosimilar market could be severely harmed if CMS does not reverse its current Medicare Part B reimbursement policy of assigning all biosimilars, tied to a single reference biologic product, to the same Healthcare Common Procedure Coding System (HCPCS), and basing reimbursement on a blended average sales price plus 6 percent. This payment system treats biosimilars as if they are small molecule generic drugs that contain the same chemical entity as their reference product, but they are not.

     Surya C. Singh, MD and Karen M. Bagnato, RPh pointed out in their December 28, 2015, report, “The Economic Implications of Biosimilars,” that biosimilars are very different from small molecule drugs. Biosimilars are not exact copies of their reference biologic and will be “compared on clinical characteristics, such as safety, efficacy, and toxicity, to demonstrate they are ‘highly similar.’ In addition, the price differential is likely to be relatively small, resulting in competition between biosimilar(s) and the incumbent biologic that approximates the competition in a multi-brand category of drugs. As a consequence of this competition, unlike generics, biosimilar manufacturers will need to provide significant marketing and education around their new products to sway providers and patients from the reference brands and ensure appropriate placement on inpatient and outpatient formularies.”

     Singh and Bagnato noted that, “compared with generics, biosimilar manufacturers will need to conduct more extensive clinical trials to demonstrate that when it is compared with the reference product, the biosimilar has a high similarity in efficacy and safety end points. The average cost of clinical development for a biosimilar ranges from $40 million to $300 million, and development takes up to 5 years; comparatively, development costs [are] $2 to $5 million for a generic drug and takes 2 to 3 years.”

     In July 2017, the Biosimilars Forum released a study conducted by Xcenda, a full-service consultancy and managed markets agency, entitled “Estimating the Budgetary Impact of Biosimilar Coding Policies Under Medicare Part B.” The Xcenda analysts found that if separate billing codes and payment systems were created for each biosimilar, savings to taxpayers would increase by $6.3 billion over 10 years. If the current payment policy is left in place, it would likely lead to a “chilling effect on future manufacturer investment in biosimilars due to uncertainty over the ability to recoup development costs.”

     The Xcenda study also pointed out that since some biosimilars may only be approved for some indications of their reference product and not all biosimilars may be approved for the same indications, grouping all biosimilars under a single HCPCS and payment rate will likely confuse physicians. The report stated, a “lack of assurance that all products reported under one code share indications could lead to unintended off-label use. This could actually prompt physicians to continue using reference drugs, with their clearer coding guidance, instead of making the switch to biosimilars.”

     CAGW agrees with the points raised in a May 5, 2017 letter sent to Health and Human Services Secretary Tom Price and CMS Administrator Seem Verma by a bipartisan group of 52 members of Congress asking that the current biosimilar reimbursement policy be reversed. They noted that the “reimbursement structure must appropriately reflect the complexity of these products and the differences between individual biosimilar products.” The representatives pointed out that, “Section 1847A of the Social Security Act (‘SSA’), 42 U.S.C. § 1395w-3a states that the calculation for reimbursing biosimilars shall be made separately, such that each biosimilar will have its own unique payment rate and unique HCPCS code” and that “this language reflects congressional intent to encourage a vibrant biosimilars market and we urge you reconcile the final payment rule to provide each biosimilar with a unique code as it is instructed to do in current statute.”

     Separate billing and payment codes for each biosimilar are essential and will help create more investment in these products, more competition, and lower prices. On behalf of CAGW’s membership, I urge you to adopt separate HCPCS codes and payment rates for biosimilars.

Sincerely,

Thomas A. Schatz
President

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