Reimbursement Issues Plague Biosimilars

February 1, 2016

The FDA’s approval of the first biosimilar, Zarxio, as an alternative to Nupogen in March of 2015 marked a turning point. Many name-brand drugs already had lower cost generics, but biologics such as Nupogen did not. The possibility of biosimilars being available at lower cost bodes well for employers seeking to control rising pharmacy costs.

In the immediate term however, hurdles exist to widespread adoption. A recent article in Managed Healthcare Executive highlighted issues related to reimbursement as one source of concern. In particular, there are questions about how biosimilars would be categorized under Medicare.

As it stands, all biosimilars (with Zarxio alone in that category for now) are assigned the same J-code for billing. J-codes refer to injectible drugs that usually cannot be self-administered, such as chemotherapy drugs. The concern is that lumping all future biosimilars under the same code could lead to confusion down the line and even lead to safety issues.

Managed Healthcare Executive interviewed Nadina Rosier, North America health and group benefits practice leader of pharmacy at Willis Towers Watson, on this topic. Rosier noted that such coding and other naming conventions for biosimilars are in the early stages. “The ability of biosimilars to reduce plan sponsors’ costs for specialty drugs,” she cautioned, “remains unpredictable.”

That said, the potential benefit is huge, with a 2014 RAND study projecting that biosimilars could result in over $44 billion in savings on biologics between 2014 and 2024. So there is a strong incentive to figure out how reimbursement would work to smooth the path to widespread adoption.

For the complete article in Managed Healthcare Executive, click here.

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