Tag Archives: biosimilars

CMS proposed rules would impact Part D drug costs and plan designs

On November 16, 2017, the Centers for Medicare and Medicaid Services (CMS) released 713 pages of proposed changes to Medicare Advantage (MA) and the Medicare Part D prescription drug benefit. The proposed changes (file code CMS-4182-P) would take effect for contract year 2019 and are intended to manage utilization of opioids, reduce costs, and provide more plan choices. The updates present major changes to the way the programs operate. According to CMS, “the proposed changes would result in an estimated $195 million in savings a year for the Medicare program over 5 years (2019 through 2023).”

Some significant impacts on Part D that plans need to be aware of would include:

Midyear formulary changes: Plans would have more flexibility to immediately incorporate generic drugs as soon as they are available.

• Plans could assess the cost impact of each new generic drug based on member utilization to weigh against administration and disruption issues.
• This proposed rule could be significant, especially if the increases in generic approvals continue. According to Milliman’s internal research, there were about 14 and 31 significant first generic launches in 2015 and 2016, respectively. And this year the U.S. Food and Drug Administration (FDA) has continued to speed up the generic approval process.

Opioid treatment: Plans would be able to restrict access and manage opioid utilization. The proposed rules codify and expand upon the current Part D Opioid Drug Utilization Review Policy and Overutilizing Monitoring System.

Biosimilars: Plans would be able to categorize certain low-cost biosimilars as generics for low-income subsidy (LIS) cost sharing and non-LIS catastrophic cost sharing. Because the LIS copays will be $3.35 for generics and $8.35 for brands in 2018, this is likely not to have a large impact on 1) lowering member costs or 2) increasing biosimilar utilization.

Point-of-sale costs: The proposal includes a request for information (RFI) regarding applying price concessions and rebates at the point of sale, which could lower member cost sharing when taking brand medications that offer rebates, but may increase premiums and government cost.

Meaningful differences testing: With the elimination or modification of this testing, plans may be able to add more enhanced alternative Part D plans to their product portfolios in the same region.

A link to the Fact Sheet issued by CMS can be found here. CMS is accepting comments until January 16, 2018.

State laws limit the interchangeability of biosimilars

sarah-burnettBiosimilars have been on our radar for a while. With Europe leading the way, this fall marks 11 years of the European Medicines Agency’s biosimilars guidelines with 20 biosimilars approved corresponding to seven different reference drugs. As part of the Patient Protection and Affordable Care Act (ACA) in 2010, President Obama amended the Public Health Service Act (PHS Act) to create an abbreviated Biologic License Application (BLA) regulatory process for biosimilars, which has yet to catch on for a variety of reasons.

Key challenges in the U.S. regulatory environment remain for establishing interchangeability for biosimilars. Drug interchangeability allows for substitution for the less expensive biosimilar version of the brand-name biologic (reference drug). The U.S. Food and Drug Administration (FDA) can classify biosimilars as interchangeable. However, state legislatures can regulate the substitutability by requiring a biosimilar in question to be first approved as interchangeable by the FDA. These regulatory hurdles thus create limits at the prescriber level to prevent substitution. So far, only two products have gained full FDA approval yet are not considered interchangeable; it is estimated that many more biosimilars are currently in development.

Before biosimilars flood the market en masse, states were taking measures to assure their regulation. In the United States, 23 states and Puerto Rico have passed legislation in the past three years to regulate the substitutability of biosimilars. The National Conference of State Legislators outlines the substitution laws for each state with an enacted law here. The common threads to the legislation are summarized below:

FDA approval. All biosimilar products seeking substitutability status must be approved by the FDA. The FDA has yet to approve a biosimilar as an interchangeable drug.

Prescriber decides. Substitution of a biosimilar for another product can be prohibited by the prescriber. In such cases, “dispense as written” or “brand medically necessary” must be noted on the prescription.

“Notification” versus “communication.” Previous legislation in 2013 and 2014 required that prescribers be notified of legally permitted substitutions made at a pharmacy. In 2015, language regarding “notification” was adjusted to allow certain “communications” to be sufficient for drug substitutions. These “communications” included notation in an electronic medical record, pharmacy benefit management (PBM) files, or pharmacy records shared with prescribers. The purpose of this language change was to allow prescribers to monitor their patients without causing unnecessary access barriers.

Patient notification. Certain states require that patients be notified of a drug substitution. Stricter versions of these regulations require explicit patient consent before any substitution is made. Documentation of notification and consent are possible barriers to adoption of approved biosimilars.

Records. Any biologic product substitution must be accompanied by records in the prescriber’s medical practice and at the pharmacy.

Immunity. In certain states, laws provide protection to pharmacists who substitute a biologic product in compliance with the state’s laws.

Web lists. States must keep an up-to-date list of permissible interchangeable products that is publicly available.

Cost or pricing. Legislation exists requiring pharmacists to explain the cost or price of a biologic and its interchangeable biosimilar. Five states require that a substitution must have the lowest cost.

Understanding the extent of the state and federal laws regarding substitutability can help employer groups and pharmacy programs estimate the potential cost impact for their organizations. Milliman has done previous research on cost savings for employer groups that take up biosimilars. As more biosimilars are approved, there will be more competition for high-priced biologics and additional drug choices will be available at more affordable prices.

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