Medicaid Clarifies Biosimilar Rebate Expectations

January 13, 2017

Late last year, CMS clarified its consideration of biosimilars as not authorized generic drugs in a Medicaid Drug Rebate Program Notice to participating drug manufacturers. The statement reaffirmed earlier communication sent March 30, 2015 that Medicaid considers biosimilars to be single-source drugs.

Because of this treatment, biosimilars should not be included in the sales for the manufacturer of a reference product when reporting AMP. Additionally, biosimilars will have a separate best price from the reference biologic. Under the current Medicaid Drug Rebate Program, the rebate amount is the greater of 23.1% of AMP or the difference between the AMP and the best price, adjusted by the Consumer Price Index-Urban based on launch date and current quarter AMP.

In contrast, Medicare Part D treats biosimilars more like generics than innovators when it comes to discounts. In an October 7 presentation, the Medicare Payment Advisory Commission illustrated the impact to out-of-pocket costs for patients because biosimilars are not subject to the 50% manufacturer discount. Until 2020, patients on biosimilar therapies could have higher annual and per-treatment out-of-pocket costs than patients on reference biologic therapies.

With three biosimilars already approved in the US and more expected in 2017, the biosimilar marketplace is taking shape.

Health Policy Weekly is written by Xcenda, a consultancy and business unit of AmerisourceBergen Specialty Group. Visit Xcenda’s online archive to access more health policy news.

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