US health insurance CMS outlines biosimilar policy

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The Centers for Medicare & Medicaid Services (CMS), which provides health insurance for the elderly and children in the US, has issued three biosimilar reimbursement documents. The documents cover Medicare Part B, Part D and Medicaid and aim to remove incentives from physicians to prescribe more costly brand-name originator biologicals rather than biosimilars.

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Medicare Part B
On 31 March 2015, CMS released an educational article on ‘Food and Drug Administration Approval of First Biosimilar Product, and the implications for Medicare coverage’ that addresses frequently raised questions regarding biosimilar reimbursement.

The article addresses coding and payment formulas and also states that ‘CMS policies will ensure Medicare beneficiaries will have access to [biosimilars]’.  CMS intends to reimburse the average sale price (ASP) for the biosimilar plus 6% of the ASP for the reference product, to allow for the lower prices expected for biosimilars. This would thus remove any financial incentive to prescribe the brand-name product rather than the biosimilar.

Medicare is a national social insurance programme, administered by the US federal government since 1966. It provides health insurance for Americans aged 65 and older who have worked and paid into the system, as well as to younger people with disabilities.

Medicare Part B generally covers drugs and biologicals that are not usually self-administered, including those that are administered in a physician’s office or hospital outpatient department. However, the CMS document also states that although coverage for filgrastim – the first biosimilar to be approved in the US [1] – ‘will generally be provided through Part B, it could also be covered under Part D in certain circumstances, e.g. nursing home or Intermediate Care Facility.’

Medicare Part D
CMS also released a document on 30 March 2015 covering Part D reimbursement for biosimilars; ‘Part D Requirements for Biosimilar Follow-On Biological Products’.

The document addresses formulary review policies, cost-sharing rules and coverage-gap discounts. The document makes it clear that plans must offer two distinct drugs in each class and also states that ‘the addition of the biosimilar and removal of the reference biological product will generally be considered a non-maintenance change’. This implies that CMS regards them as the same drug, however, it does state that ‘changes will be evaluated … on a case-by-case basis’.

Medicare Part D generally covers self-administered drugs from every therapeutic category of prescription drugs, with formularies varying to a certain extent by plan.

On 30 March 2015, CMS also issued guidance on biosimilars and the Medicaid Drug Rebate Program. The document encourages states to use biosimilars to reduce costs and improve access. The document describes the use of biosimilars ‘as a unique opportunity to achieve measurable cost savings’. CMS suggests the use of step therapy, prior authorization and preferred drug lists, as well as supplemental rebate agreements between states and manufacturers as ways to achieve these cost savings.

It also suggests that states educate their physicians and pharmacists on how to prescribe and dispense cost-effective biosimilars and encourage prescribers to consult the US Food and Drug Administration’s (FDA) Purple Book, which FDA first published in September 2014 [2], to assign the proper biosimilar name.

Medicaid is a social healthcare programme in the US for families and individuals with low income and limited resources.

Related article
Biosimilars could save US$44.2 billion over 10 years

1.   GaBI Online - Generics and Biosimilars Initiative. FDA approves its first biosimilar []. Mol, Belgium: Pro Pharma Communications International; [cited 2015 Apr 27]. Available from: 
2.   GaBI Online - Generics and Biosimilars Initiative. FDA debuts purple book for biologicals and interchangeable biosimilars []. Mol, Belgium: Pro Pharma Communications International; [cited 2015 Apr 27]. Available from: 

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Source: CMS

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