Although biologic drugs hold great potential for fighting disease, they are extremely costly. That’s why the movement toward biosimilars—almost identical copies of original products but made by different manufacturers—is big news for patients and providers. So far, only one biosimilar—Zarxio—has been approved for sale, but others are expected. It’s a new frontier for pharmacists and supply chain professionals, including related reimbursement methods and naming implications.
On Jan. 1, 2016, new Medicare rules took effect impacting reimbursement for biosimilars. The rules say all biosimilars that are filed under one reference product license will be billed under a single Healthcare Common Procedure Coding System (HCPCS) code, and payment will be based on the average sales price of the biosimilars within that code.
“The reimbursement model is interesting because if each biosimilar receives its own billing code and average sales price, then it would be treated like other branded products, unlike generics where they are all under one average sales price,” says Nicolle Rychlick, PharmD, director of Clinical Integration and Implementation at HealthTrust. “I think this is a space in which we still have a lot to learn. We only have one biosimilar product on the market as of now, so we don’t know how having multiple products rolled into one average sales price will affect pricing, access and patient use.”
In addition to the billing questions surrounding biosimilars, HealthTrust leaders are monitoring the naming of these drugs. Traditionally, a generic name might apply to multiple drugs and the pharmacist decided which one to dispense. In a hospital environment, the facility’s drug formulary—which has been approved by a multidisciplinary group of pharmacists and clinicians—dictates that decision, Rychlick says.
However, for retail or outpatient pharmacies, the same approved formulary does not apply. Many states are implementing legislation regarding whether a pharmacy can interchange biosimilars and what information the pharmacy must report to patients and physicians.
“We have to think about the operational challenges,” Rychlick says. “A complicated naming system will be a barrier to the adoption of drugs that are considered highly similar and have no clinically meaningful difference to their reference product.”
Rychlick hopes to see national drug codes (NDCs) become a more important tool in tracking biosimilars. “The NDC can be traced to a specific drug, allowing for better patient tracking,” she says.
As more biosimilars become available, HealthTrust will continue to monitor regulatory developments and will guide members in how to utilize these new drug options in the most cost-effective ways.