CMS’s Proposed Rules Tie Reimbursement Rate for Biosimilars to Average Price

Earlier this year, the Center for Medicare and Medicaid Services (CMS) proposed new rules that would regulate payment for biosimilars, creating a single payment category for all biosimilars of the same reference biologic. Under the proposed scheme, Medicare and Medicaid payments for those biosimilars would be based on the average sale price of all biosimilars to a given reference biologic, plus 6% of the average sale price of the reference biologic.

CMS’s proposal sparked immediate controversy. Critics of the policy argue that it will stifle a fledgling industry by discouraging investment and new entrants. Others argue that the proposed regulations are contrary to CMS’s statutory authority under the Affordable Care Act, which requires that each biosimilar be assigned a unique payment code, suggesting that Congress intended for biosimilar prices to be determined separately. Critics also argue that establishing a single group payment code for a group of biosimilars will make it harder to track safety and efficacy for individual biosimilars—a more pressing issue than with generic drugs, given the potential for a higher degree of variability among biosimilars.

While the public comment period for the proposed rules is now closed, several issues remain unresolved. For example, how will CMS handle payments for biosimilars receiving the interchangeable designation? Neither CMS nor the FDA has provided final guidance or regulations on interchangeability.

The text of the proposed rules is available here. We will update this story as it progresses.