Report: Policy Changes Needed to Ensure Long-Term Market Stability for Biosimilars

In its market sustainability for infused biosimilars report, IQVIA echoed the need to address issues regarding misaligned incentives regarding rebates, slow or limited uptake, and concerns about market viability, which will be crucial for ensuring the long-term sustainability of biosimilars and maximizing their benefits for the health care system.

The report was intended to create a baseline of foundational data to better understand biosimilar dynamics with a particular focus on infused biosimilars that fall under the Medicare Part B buy and bill program. Using various case studies, the researchers wanted to gain understanding into the key issues that can result in suboptimal functioning for the US biosimilar market.

Over the past decade, biosimilars of infused biologics have significantly reduced health care costs, particularly within Medicare, saving billions of dollars. However, challenges persist in the reimbursement and procurement systems, threatening the long-term sustainability of biosimilars. Biosimilar development can cost between $100 million and $300 million, and reimbursement dynamics, reliant on declining average selling prices (ASPs), may erode profitability over time. This raises concerns about sustained market participation and patient access.

The report highlighted several key issues that can lead to suboptimal uptake of biosimilars in the US, including:

• Misaligned incentives around commercial payer rebates: The report mentions that misaligned incentives around commercial payer rebates can inadvertently promote the use of costlier drugs, as seen in the case of infliximab. This can result in limited early coverage of biosimilars and slow uptake.
• Net cost recovery: Sustainability of the infused biosimilar market is impacted by net cost recovery, which is the difference between the cost of the product and the reimbursed amount at the provider level. This can act as a barrier to uptake, especially when the net cost recovery is higher for the costlier originator due to reimbursement dynamics or lower reimbursement amounts offered by payers for biosimilars compared with the provider purchase price.
• Slow and limited uptake of biosimilars: Various stakeholders have recognized issues such as slow and limited uptake of biosimilars. Policy levers suggested to overcome these issues often focus on maximizing short-term savings without addressing long-term sustainability risks.
• Rebate walls and net cost recovery dynamics: Factors such as rebate walls and net cost recovery dynamics can limit the optimal uptake of the lowest-cost biosimilar options, leading to lost savings in the health care system.
• Market viability concerns: Stakeholders, including providers and manufacturers, have expressed emerging concerns about the financial viability of developing and prescribing biosimilars. Policy environments need to be refined to create a sustainable biosimilar system that works for all stakeholders in the short and long run.

Challenges such as rebate walls hindering uptake and net cost recovery dynamics for providers pose significant barriers. Additionally, commercial payer rebates and discounts can drive down ASP, potentially impacting manufacturer viability. Moreover, patient out-of-pocket costs remain similar between biosimilars and originators due to supplemental insurance, diminishing incentives for biosimilar adoption.

The researchers suggested that CMS adjust its existing payment policies through regulatory actions to enhance add-on payments and address issues with lagging ASP and the impact of rebates. There were also several policy actions recommended, including regulatory measures that address stakeholder concerns such as providers, manufacturers, the health system, and patients. These actions involved adjusting reimbursement mechanisms and ensuring financial viability for all involved parties.

Additionally, stakeholders were urged to continually refine the policy environment to create a sustainable biosimilar system that aligned incentives for switching to biosimilars, supported manufacturer investment in research and development, optimized savings for payers over the long term, and reduced out-of-pocket costs for patients.

By implementing these suggested approaches and addressing key issues, stakeholders could work together to ensure the ongoing sustainability of biosimilars in the US health care system, maintaining cost savings and improving access to biologic therapies.

The researchers concluded saying that the overall goal of policy changes should be to “create a financially predictable payment and reimbursement environment for all stakeholders involved to ensure long-term sustainability of biosimilars. The focus of policy actions is on CMS as these issues can be addressed more immediately through CMS actions and other policies can be discussed over time to address these issues for commercial plans.”

Reference

Long-term market sustainability for infused biosimilars in the U.S. IQVIA. January 2024. Accessed February 14, 2024. https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/long-term-market-sustainability-for-infused-biosimilars-in-the-us