Increasing Provider Reimbursement for Biosimilars Will Lead to Greater Adoption

Monday June 28, 2021

Biosimilar competition has the potential to provide greater access to important treatments for America’s patients and cost savings for the nation’s health care system of as much as $130 billion by 2025. Biosimilars offer average cost reductions of 30% compared to the brands, but their adoption is lagging, due at least in part to misaligned provider reimbursement incentives. Fortunately, there are bipartisan solutions that would help to address this challenge.

Representatives Kurt Schrader (D-OR) and Adam Kinzinger (R-IL) have introduced the BIOSIM Act to encourage greater use of these novel therapies for life-threatening conditions such as cancer and chronic kidney disease. If signed into law, this bill will accelerate patient access to new lower-cost biosimilar treatments by providing a temporary payment increase to clinicians that prescribe them. 

Here’s the problem. Under Medicare Part B, health care providers are reimbursed the average sales price (ASP) of the brand-name biologic and biosimilar, plus an additional 6% of the cost of the brand-name biologic. Effectively, this arrangement means that Medicare does not encourage providers to use the lower-cost biosimilars. The resulting slower adoption of these competitors should come as no surprise.

But recent studies show that making changes to provider reimbursement can encourage greater biosimilars adoption. For instance, IQVIA recently found that biosimilars adoption was greater when the relative reimbursement was higher for the biosimilar. It also noted that providers in the CMS Oncology Care Model, which holds providers accountable for the total cost of care, use biosimilars more than other providers. The BIOSIM Act builds on this foundation, providing a temporary incentive for provider adoption. The legislation would place biosimilars on a more level playing field with brand-name biologics, boosting competition and reducing costs for patients and taxpayers. 

The BIOSIM Act would provide a temporary add-on payment of +8% for providers when they use a lower-cost biosimilar, an increase of 2%. Importantly, the policy would apply only when the price of a biosimilar is lower than that of the brand-name reference biologic. This would help guarantee savings. 

The potential of biosimilars is clear – lower costs and greater patient access to medicines. However, these savings will not materialize unless provider incentives are aligned with these goals. The bipartisan BIOSIM Act is an important step to correct misaligned policies and encourage the use of lower-cost biosimilars.

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Related Resources

Biosimilar Medicines Equal More Accessible Care for America’s Patients [Blog]

The Biosimilars Council Applauds Reintroduction of the Bipartisan BIOSIM Act [Statement]

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About the Biosimilars Council

The Biosimilars Council, a division of the Association for Accessible Medicines (AAM), works to ensure a positive environment for patient access to biosimilar medicines. The Biosimilars Council is a leading source for information about the safety and efficacy of more affordable alternatives to costly brand biologic medicines. Areas of focus include public and health expert education, strategic partnerships, government affairs, legal affairs and regulatory policy. More information is available on our about page.

About AAM

AAM is driven by the belief that access to safe, quality, effective medicine has a tremendous impact on a person’s life and the world around them. Generic and biosimilar medicines improve people’s lives, improving society and the economy in turn. AAM represents the manufacturers and distributors of finished generic pharmaceuticals and biosimilars, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals are 90 percent of prescriptions dispensed in the U.S. but only 20 percent of total drug spending.

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