CMS Discusses Medicare Implications of FDA Approval of First Biosimilar Product

CMS has issued an educational article on “Food and Drug Administration Approval of First Biosimilar Product,” and the implications for Medicare coverage. CMS states that its policies “will ensure Medicare beneficiaries will have access to this new product, as it does for other drugs that receive FDA approval.” The document includes the following Q&A:

Question: How will a health care professional that administers this product get reimbursed under Medicare Part B?
Answer: Medicare Part B payment for newly approved drugs and biologicals is available once the product is approved by the FDA. CMS will incorporate biosimilars that are approved under the abbreviated biological approval pathway into the Average Sales Price (ASP) payment methodology, and issue additional guidance as necessary. Initially, once the manufacturer’s wholesale acquisition cost (WAC) is available, Medicare will pay 106 percent of the WAC for the product until ASP information is available. Once ASP information is available for this biosimilar product, Medicare payment will equal the ASP for the biosimilar product plus six percent of the ASP for the reference product.

Question: How soon will CMS be releasing coding information related to Part B reimbursement?
Answer: CMS anticipates including the approved biosimilar in the next quarterly Healthcare Common Procedure Coding System (HCPCS) tape release in the coming weeks, appearing in the claims processing system on July 1, 2015, effective retroactively to the FDA approval date.

Question: Will CMS be assigning unique codes to each biosimilar released?
Answer: CMS will create a separate code to distinguish the biosimilar from the reference biological. CMS is considering policy options for coding of additional biosimilars, and will release further guidance in the future.

Question: Will use of a distinguishing identifier to biological products make it harder to achieve Medicare reimbursement?
Answer: Distinguishing identifiers will have no bearing on coding and payment.

Question: How will CMS address providing access to biosimilars through Medicare Part D?
Answer: Although coverage for filgrastim will generally be provided through Part B, it could also be covered under Part D in certain circumstances (for example, nursing homes or Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID)). CMS will be releasing guidance to plans confirming that biosimilars approved by the FDA will be subject to existing rules for prescription drugs under Part D.