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CMS Announces Pricing, Policies for Use of Biosimilars

Reimbursement will be through Part B, Part D, and state coverage policies

The Centers for Medicare & Medicaid Services (CMS) has announced that it plans to begin paying for biosimilars through its Part B, Part D, and state coverage policies by this summer.

As with standard drugs, coverage determinations will be based on the manufacturer’s wholesale acquisition cost and the average sales price of the biosimilar, according to a question-and-answer sheet on how biosimilars will be reimbursed under Medicare Part B.

Medicare will pay 106% of the wholesale cost of the product until the average sale price can be determined. Once that information is available, coverage will be set at the average sale price plus 6% of the average price for the reference product, the CMS said in a Q&A document released last week.

Biosimilars will have different reimbursement codes than those used to denote their reference products. The CMS expects to come up with those codes by July 1, with reimbursements applying retroactively to the biosimilar’s FDA approval date — the first of which came last month when the FDA approved Zarxio (filgrastim-sndz, Sandoz).

The distinct codes are a positive step, as they recognize that biosimilars are not inherently identical to their reference products and will ensure that the CMS reimburses for them properly, the Biotechnology Industry Organization says.

CMS plans to encourage the use of biosimilars and is also encouraging state programs to work biosimilars into their preferred drugs lists as a means of saving money and expanding access to expensive treatments.

Medicare and Medicaid already receive rebates from drug-makers, but the CMS encourages states to negotiate further.

Source: FDAnews; April 10, 2015.

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