The biosimilar balance: More options, lower costs

May 10, 2016

The fly in the ointment: CMS' current plan for HCPCS codes is a real buzz kill.

More than 200 biologic specialty medications available in the United States today are changing lives for millions of Americans, freeing many from debilitating diseases and constraining conditions. Behind many successful cases is a story of multiple options tried and discarded before a personalized match between drug and patient is discovered.

Even more options are on the way with the new category of medications known as biosimilars, and better yet, they may come to market at a lower cost than original biologic specialty drugs. It’s a great combination - more options, lower cost – for patients and providers.

That is, unless the Centers for Medicare & Medicaid Services (CMS) uses an obscure reimbursement process to interfere with a free-market solution.

See also: The five forces shaping the biosimilar pipeline

The fly in the ointment

In a recent Congressional hearing on biosimilars, committee members expressed concern over the CMS decision to assign to all biosimilar versions of an original drug a single Healthcare Common Procedure Coding System (HCPCS) billing code, known as a J-code.

With only the single J-code, a biosimilar’s only relevant feature will be price, depriving patients of a robust selection of biosimilars with wider clinical options at a lower cost.

Excluded from reimbursement would be investment in new indications, better quality,less uncertainty, greater reliability, and sustained innovation. This means that biosimilars with indications for a patient’s specific conditions might not come to market, or that the cost of securing approval for those indications could make a drug too expensive. For physicians reimbursed by Medicare for administered drugs, the cost of the drug could be more than the Medicare payment.

See also: What's holding up biosimilar development?

Square peg, round hole

The problem is that CMS is attempting to fit a square peg into a round hole by treating biosimilars the same as traditional generics. These new drugs are not generics, nor are they chemically identical to the original drugs they copy. They are similar to the original in safety and efficacy, but different from the original and each other in important ways.

The molecules of generics and branded drugs are small, manufactured by chemical processes, and typically ingested orally to work within cells. On the other hand, living systems produce biologics, usually large molecule-like proteins infused directly into the bloodstream to work on cell surfaces.

It is important to note that any biologic can trigger immune and other reactions through differences between drugs and patients’ antibody profiles. In addition, each biologic product possesses unique properties and sensitivities in manufacturing and handling.

 

Safety first

Access to a choice of lower-cost biosimilars is important for our patients, especially where an individual patient’s immune reaction may differ between drugs. In addition, CMS should not encourage hospitals and payers to prefer the lowest-cost biosimilar at any given time, reducing choice and potentially encouraging inappropriate switching between drugs.

For safety reasons, every biosimilar must also be fully distinguishable in all its names or codes to permit quick and accurate tracing to its manufacturers. This includes the HCPCS J-code, which FDA uses to monitor drugs in its new Sentinel Initiative.

For an initiative like Sentinel, getting the coding of biosimilars right from the beginning is critical. Data do not reside in a central computer. Instead they are housed with 18 large health insurers and disease registries, as well as 88 hospitals and inpatient facilities.

Standard data categories, including HCPCS J-codes, make it possible to pull and study data from each source. This system can be a powerful tool for measuring the performance of each biosimilar, but only if each has a separate J-code. In addition, separate billing codes for biosimilars would facilitate claims-based research encompassing the differences between biologics, including biosimilars.

Separate drug, separate code

For clinical and safety reasons, CMS needs to reverse course and adopt separate HCPCS J-codes for each biosimilar. The new age of biosimilars holds great promise for both lower costs and better health. However, to deliver on that promise, we need a robust, competitive market based on differentiated benefits, including price. For that market to thrive, each biosimilar needs a separate HCPCS billing code. 

James Smeeding is the immediate past executive director of the National Association of Specialty Pharmacy and a founder and past president of the International Society for Pharmacoeconomics and Outcomes Research. Opinions expressed are his own.