In a recent study conducted by the U.S. Department of Health and Human Services Office of Inspector General, researchers evaluated quarterly biosimilar and reference product prices; use; and program and enrollee costs in Medicare Part B from 2015 to 2021. The researchers also employed this information to calculate approximations of how Part B and enrollee spending could have changed if biosimilars that were more affordable than their reference products had been used more often or if biosimilars and their reference products had been paid using a least costly alternative (LCA) payment policy.

The researchers noted that this study identifies opportunities to decrease spending for Part B and its enrollees by augmenting the utilization of lower-cost biosimilars, which aligns with the goals of the Office of Inspector General and the Department of Health and Human Services. The study also provides a better understanding of the impact of biosimilar market entry on Part B costs and how biosimilar use in Part B has developed under existing payment policies. Additionally, it estimates potential spending reductions that could be reached through better use of biosimilars or under an LCA payment policy.

The researchers discovered that biosimilar competition has reduced costs for biosimilars and their reference products, adding, “However, many biosimilars remain more affordable than their reference products and could be more widely used. We estimated that with increased use of these more affordable biosimilars instead of reference products, Part B and enrollee spending could have been reduced in 2021. Specifically, Part B and enrollee spending on these biologics could have decreased by $179 million, or 4%, if more affordable biosimilars had been used as frequently as the most-used biosimilars.”

The researchers also stated that a diverse approach to Part B payment policies for biologics could have resulted in even more significant expenditure decreases. One type of alternative payment policy that could assist in addressing the high costs of biologics for Part B and its enrollees is an LCA policy under which payment would be established on the lowest-cost drug, irrespective of which drug was prescribed and administered.

They wrote, “We estimated that an LCA policy for biosimilars and their reference products would have reduced Part B and enrollee spending on these biologics by $419 million or 9% in 2021, even without an increase in the use of more affordable biosimilars.”

To decrease Part B and enrollee spending on biologics, the researchers recommended that the Centers for Medicare & Medicaid Services (CMS) follow one or more payment changes that could further attain savings from biosimilars for Part B and enrollees. This could include pursuing additional legislative authority. The authors added that “CMS did not clearly concur or non-concur” with their recommendation but acknowledged that it is committed to taking action, as applicable, within its authority.

The primary message from the researchers’ findings is: “Biosimilar competition has already led to lower costs for the Medicare Part B program and enrollees. However, opportunities exist to further reduce Part B and enrollee spending through increased use of more affordable biosimilars or with the implementation of different payment policies.”

The content contained in this article is for informational purposes only. The content is not intended to be a substitute for professional advice. Reliance on any information provided in this article is solely at your own risk.