ViewPoints: Biosimilars win billing code U-turn in US

(Ref: ViewPoints Desk)

Challenges faced by biosimilar developers in the US market have been well documented in recent weeks. However, a small, but important, victory has recently been secured courtesy of a decision by the Centres for Medicare and Medicaid Services (CMS) to introduce separate J-codes – or payment codes – for individual biosimilar products under Medicare Part B from the beginning of 2018. This should aid future adoption of biosimilars, argue experts in the field.

Back in 2015, the CMS decided to group all 'buy and bill' – or physician administered –  biosimilars that reference a specific originator product under a single J-code with the branded product also given a separate code; in effect treating biosimilars as multi-source drugs, similar to generics. In contrast, under Medicaid, CMS uses the opposite approach with biosimilars treated as a single source (or branded) drug. Thus, the same biosimilar may be reimbursed differently depending on whether the product is claimed under Medicaid or Medicare Part B.

With J-codes used to categorise a weighted average sale price (ASP), biosimilar advocates argue this system unfairly favours manufacturers of branded originator products – ViewPoints: CMS final rule on biosimilar reimbursement another win for innovators

For example, utilisation of a shared J-code means the price of an individual biosimilar product is dependent on the price of other biosimilars in the same category, providing less assurance for purchasers about future cost, while versus innovators, biosimilar manufacturers have no flexibility in negotiating different prices with different providers.

In addition, a policy of grouping all biosimilars together under the same J-code in Medicare Part B fails to consider variations between biosimilars, which can have separate clinical profiles. With this heterogeneity, biosimilars may have differences in treatment effect or approved indications.

Therefore, grouping biosimilars under the same J-code can mislead and confuse physicians and patients. Moreover, this policy hinders pharmacovigilance processes, as differences in clinical performance between biosimilars, such as frequency of adverse events or immunogenicity risks, cannot be effectively tracked. Furthermore, if all interchangeable and non-interchangeable products are blended, there may no longer be an incentive to pursue interchangeability, which requires significant time and financial investment. 

Under the new system, biosimilar companies will be able to "control their own pricing, provide discounts to preferred clients, bundle discounts across products and offer rebates to MCOs," wrote Bernstein's Ronny Gal in a note to investors. He adds that with different J-codes, payers are also much more likely to standardise on a single supplier, to avoid billing errors. This will provide a material barrier to switching between biosimilar products, which should prove advantageous to companies marketing them. "In short it is an important development as it allows companies to invest in a differentiated future for each biosimilar product," added Avalere's Gillian Woollett.

The new system is not without benefit to innovators also, says Gal, noting that "with likely higher biosimilar pricing, pressure will be alleviated." Furthermore, Gal expects biosimilars, "free from the vice of shared J-code," to compete on other factors in addition to net price which will include rebating and product bundling.

See also ViewPoints: As lawsuit against Johnson & Johnson is filed, FirstWord's new biosimilar report sheds light on Pfizer's Inflectra challenges in US market