Budget Bill Contains Wins for Biosimilars, Effort to Reduce Drug Costs Continues

With a new budget bill having been signed by President Trump, the second government shutdown of 2018 is now over. Despite a push by stakeholders, the Bipartisan Budget Act of 2018 did not include the long-anticipated CREATES Act, though it did make several provisions of interest to biosimilar stakeholders.

2018 Budget Specifics

First, the budget bill will both sunset the exclusion of biosimilars from the Medicare Part D coverage gap discount program, and will close the Part D coverage gap in 2019 (instead of 2020, as previously scheduled).

On the Part B side, the bill includes a technical provision reversing a CMS policy that would have linked physicians’ quality payment adjustments to Medicare Part B drug costs starting in 2019.

“The Part B technical fix is an important course correction that will hopefully lead to productive discussions about how to realistically address the issues of care access and high drug costs,” said David Daikh, MD, PhD, president of the American College of Rheumatology, in a statement praising the bill’s passage.

The budget bill also quietly repealed a broadly unpopular feature of the Affordable Care Act: the provision for an Independent Payment Advisory Board (IPAB). The IPAB, a 15-member panel (or HHS if such a panel could not be convened), would have been called upon when Medicare spending exceeded statutory benchmarks. The board would have been required to provide recommendations to Congress on mandatory cost-cutting measures to control Medicare spending. The IPAB had been widely criticized by stakeholders, including the American Medical Association, which had long advocated for a repeal of the provision.

Despite these features of the bill, notably absent from the legislations was specific language addressing drug pricing, despite bipartisan concern over the increasing price of such high-cost drugs as biologics.

Hearing on Drug Costs Focuses on Biosimilars

Even as the debate over the budget bill took shape in Congress, the Senate Special Committee on Aging heard testimony from a range of stakeholders on solving the problem of the high cost of biologic drugs that treat rheumatic diseases.

William F. Harvey, MD, MSc, FACR, associate professor of medicine and clinical director of the division of rheumatology at the Tufts Medical Center, called on the committee to support funding for the FDA to approve additional biosimilars, noting that “a vibrant biosimilar marketplace will lead to competition and reduced cost. As that happens, we must become vigilant about the drug distribution system and ensure that these savings are passed on to consumers, my patients.”

Also testifying was Jack Hoadly, PhD, research professor emeritus at the Health Policy Institute, McCourt School of Public Policy, Georgetown University, who said that the path to widespread biosimilar use—and the cost savings that come with strong uptake—will require establishment of interchangeability status by the FDA, enactment of state laws to address the substitution of these drugs with their reference products, acceptance of biosimilars by clinicians and patients, and further research showing that switching to biosimilars can be undertaken safely.

Committee Chair Susan Collins, R-Maine, is reportedly crafting new legislation aimed at addressing high drug costs through implementing new restrictions on the “evergreening” of drug patents (the practice of patenting new formulations or indications of an existing drug therapy) that can keep biosimilars from reaching the US market.

Drug Pricing Specifics Coming in President’s Budget Proposal

Also concerned about drug costs is Alex Azar, Secretary of HHS, who promised on Thursday that the President’s budget proposal, due to be released on Monday, would include provisions specific to drug pricing.

Bloomberg reports that the proposals in the President’s budget will include ensuring that discounts negotiated by pharmacy benefit managers are passed to Medicare beneficiaries, creating a spending cap for out-of-pocket prescription costs, potentially making generics free to low-income seniors, and moving Part B drugs to Part D coverage.