Reimbursement Policy for Biosimilars Will Have Negative Consequences for Patients

The Centers for Medicare and Medicaid Services (CMS) have finalized a rule regarding the Medicare reimbursement methodology for biosimilar products. Biosimilars are prescription medications which have been approved by the Food and Drug Administration (FDA) as being “highly similar” to a specific biologic medication (known as the reference product). Thus, it is easiest for most people to think of biosimilars as the equivalent of generics for small molecule brand name medications, though this is not scientifically accurate. While small molecule generics are chemically identical, patients may respond differently to the reference product and the biosimilars.

The decision over how biosimilars, or any medication, should be reimbursed by CMS should be determined by economic principles based on the value of the medication to patients and without putting patient safety and access to such products at risk. If the statutory text does not clearly provide for the favorable regulatory outcome of these factors, it should be amended. Because the rule finalized by CMS would provide equal reimbursement for all biosimilars of a single reference product, without regard for the relative value of such products based on factors such as the number of indications they are approved to treat or the side effects they cause, higher-value products may get squeezed out of the market. Even if CMS has appropriately interpreted the statute in development of this rule and in a consistent manner with how reimbursement policies have been determined for other drugs based on the same section of the law, the underlying policy appears to be flawed. This reimbursement methodology will likely lead to undesirable economic impacts, could stifle a fledgling biosimilars marketplace, and also lead to potential issues related to patient safety and access to appropriate treatment options, and therefore Congress should proactively fix this flawed approach.

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