Drug Pricing Proposals and Implications for Biosimilars

Drug pricing remains at the forefront of healthcare policy discussions as medication costs, especially of biologic products, continue to rise. Amid a fluctuating political climate with the 2020 presidential election around the corner, multiple pricing proposals are entering Congress as a means to control drug costs. Biosimilars are considered a critical measure to lower drug costs, and there is a general push to increase utilization through these many pricing proposals.

A few bills this year have focused directly on increasing biosimilar utilization while other larger bills also have implications for biosimilars. If passed, such bills may present a window of opportunity for biosimilar manufacturers to increase their commercial presence.

In February 2019, the Medicare Negotiation and Competitive Licensing Act of 2019 (HR 1046) was introduced in Congress and still maintains popularity today. Under the bill, CMS has the ability to negotiate drug prices with manufacturers. In the event there is no agreement on a fair price, the drug is subject to competitive licensing, or in other words, the HHS may authorize alternative manufacturers to sell the medication to the government at the fair price value. In such a case, the government may purchase a biosimilar product rather than its branded reference biologic. As is known, multiple biosimilars are approved in the United States, but have not launched due to patent exclusivities; such is the case with Humira and Enbrel, with no biosimilars currently expected to launch until 2023 and 2029, respectively.

With approval, HR 1046 may be a boon for biosimilars, potentially allowing some competitors for some products to launch earlier than date of patent expiration through competitive licensing. Though there would be some price limitations in place with this bill, there would be an opportunity to capture some market share.

The Affordable Prescriptions for Patients Through Improvements to Patent Litigation Act (HR 3991) was proposed in July 2019 in an effort to increase biologic competition with biosimilars. The number of patents that can be asserted by the manufacturer of a reference product would be limited to 20 with further time limitations on the establishment of these patents. As previously mentioned, legalities on innovator patents has been a key hindering factor for biosimilars across therapeutic areas. Such legislation could pave a smoother path to market for biosimilars.

One key provision of the Prescription Drug Pricing Reduction Act (PDPRA) of 2019, introduced in September, is that biosimilar manufacturers, among others, without a Medicaid rebate agreement would be required to report average sales price (ASP) information to HHS to aid in establishing Medicare payment rates and a transparent system. Further, the proposal suggests increasing the add-on payment for biosimilars from 6% of the originator product’s ASP to 8% for 5 years. There are some additional segments within this bill adjusting the payment rates for biosimilars, and overall, the proposal is geared towards encouraging biosimilar development.

The Lower Drug Costs Now Act (HR 3) is a recent drug pricing bill addressing healthcare costs on the whole; it was updated to include an amendment for biosimilars to encourage biosimilar use. The included provision, previously introduced as a separate bill in Congress titled the BIOSIM (Bolstering Innovative Options to Save Immediately on Medicines) Act, would increase reimbursement of biosimilars in Medicare Part B from ASP plus 6% to ASP plus 8% for 5 years. Such a change would incentive biosimilar use across in clinical settings.

The Advancing Education on Biosimilars Act of 2019 is another biosimilar-centric bill aimed to promote biosimilars through the development of federal programs such as continuing education programs for healthcare providers (HCPs). The FDA would also be involved in biosimilar education initiatives. Of note, this is not the first attempt at the federal level for biosimilar education; education has been an ongoing initiative, such as through the FDA’s Biosimilar Action Plan of 2018.

These are only some of the many proposals that have been introduced around drug pricing. So what does this mean for biosimilars? Based on the number of bills coming through Congress, it is clear that biosimilars have become synonymous with decreasing healthcare costs. Even with only a few biosimilars commercially available thus far, the federal push towards these drugs has been pronounced. It will be interesting to see how this push continues, once more biosimilars, like those for adalimumab, are on the market in coming years.