Alternative Payment Policies May Help Medicare Part B Reap Greater Savings From Biosimilars

The growing use of biosimilars has reduced spending in the Medicare Part B program, but there are opportunities to further reduce costs — through greater use of more affordable biosimilars and through the implementation of different payment policies, according to a study published by the HHS Office of Inspector General (OIG).

The OIG analyzed the average sales prices, utilization and costs of 21 biosimilar drugs and their reference biologic products in the Medicare Part B program between 2015 and 2021. The agency found that overall use rate of biosimilars in Part B jumped from 18% in 2015 to 62% in 2021. While the adoption of biosimilars has lowered both the prices of biologics and biosimilars, Part B spending could have been reduced by $179 million in 2021 if the five biosimilars that cost less than their reference products — epoetin alfa, infliximab, bevacizumab, rituximab and trastuzumab — had been used at the same rate as the most widely used biosimilar, filgrastim.

Increased use of rituximab biosimilars — which cost about one-quarter less than their reference product — could lead to the largest spending reduction, according to the report. For Part B enrollees, the typical yearly supply of rituximab costs $4,267 for the reference product, yet only $3,048 for the biosimilar.

The OIG recommended that CMS consider applying alternative Part B payment polices for biologics to maximize cost savings. A least costly alternative (LCA) policy — under which payment would be based on the lowest-cost biologic drug, regardless of which biologic a provider administered — could have reduced Part B and enrollee spending by $419 million in 2021, even without an increase in the use of more affordable biosimilars.

As of March 2024, there are 48 FDA-approved biosimilars in the U.S. for 15 reference products. The majority of people with commercial or Medicare health plans have coverage for biosimilars and their reference biologics under their medical benefit with utilization management restrictions, according to coverage policy analysis data from MMIT Analytics (MMIT is the parent company of AIS Health).

This infographic was reprinted from AIS Health’s biweekly publication Radar on Drug Benefits.

© 2024 MMIT
Jinghong Chen

Jinghong Chen Reporter

Jinghong produces infographics and data stories on health insurance and specialty pharmacy for AIS Health. She graduated from Missouri School of Journalism with a focus on data journalism and international reporting. Before joining AIS in 2018, she worked at WBEZ, Al Jazeera English and The New York Times Chinese.

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