As Date for First Biosimilar to Hit the Market Draws Close, Reimbursement Remains Fuzzy

In July, Novartis/Sandoz finally received the go-ahead from a federal appeals court to market Zarxio, the biosimilar to Amgen’s Neupogen. As the doors open for marketing of these “interchangeable biologics,” reimbursement challenges might be the next barrier to surmount.

In a press release yesterday, the chairman of the Biosimilars Council Bertrand C. Liang, said that the regulatory process for biosimilars is still a work in progress in the United States and is not far ahead enough to “support regulation related to coverage, coding and payment of interchangeables.” The council has urged CMS to hold back on Medicare Part B reimbursement for biosimilars.

According to the CMS, Medicare Part B payment for biologicals will be available upon FDA approval and each biological product will receive its own billing code. The payment, says the guidance, will be 6% add-on to the wholesale acquisition cost or the average sales price (ASP), as the case may be. This guidance refers to payment for biosimilar administration in an outpatient setting such as a physician’s office or clinic but not in a hospital outpatient setting. However, a problem with this is that biosimilars, which are expected to cost less than the reference product, would yield a lower payment to physicians. To counter the issue, CMS said that once ASP information is available for this biosimilar product, Medicare payment will equal the ASP for the biosimilar product plus 6% of the ASP for the reference product.

However, according to Liang, “Grouping all biosimilars together under one payment calculation and billing code, while using a different code for the reference product, creates confusion, making it difficult to write coverage policies.” He is of the opinion that this could even have an adverse impact on the future development of biosimilars.