An unanticipated combination of government policy changes has led to a truly bizarre circumstance: The Medicare program and individual Medicare patients are paying more for lower-cost biosimilars. Further, hospitals are earning windfall profits from these lower-cost biosimilars, though physician offices can’t access the same financial benefits.
Sound bonkers? You bet.
To understand this strange turn of events, I delve into the vagaries of Medicare Part B reimbursement and the recently implemented outpatient prospective payment system (OPPS) rule for drugs acquired under the 340B Drug Pricing Program.
As I explain below, the Centers for Medicare & Medicaid Services (CMS) recently made all biosimilars eligible for “pass-through payment status.” This obscure regulatory change (also explained below) altered reimbursement for some—but not all—biosimilars.
I illustrate the funky economics behind biosimilars’ newfound profitability and raise four crucial policy questions. Expect to hear more about this as politicians digest the spin from all sides of these tangled policies. However, it’s clear that CMS needs to act before this strange mix of policies disrupts the biosimilar market.
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