By Juliana M. Reed
Arkansans suffering from painful and chronic medical conditions stand to benefit from a federal rule change this year that would offer greater access to treatment for Medicare patients suffering from cancer, diabetes and autoimmune diseases. The new policy, which will open up the market for a type of medication known as biosimilars, could increase patient access to lifesaving care for one of the largest Medicare beneficiary populations in the country.
For years, the Centers for Medicare & Medicaid Services maintained a billing policy that undermined the emergence of a robust biosimilars marketplace in Arkansas and around the country. Biosimilars are highly similar versions of “biologic” drugs; both are made from living cells rather than through chemical synthesis, which is how conventional drug medications are made. However, despite clear differences among unique biosimilars for a given reference biologic, CMS applied a broad, one-size-fits-all approach to their reimbursement.
This sweeping CMS policy prevented the healthcare system from fully realizing the benefits of biosimilars. Because they are highly specialized treatments, biologics can be extremely expensive to produce, a cost that is passed on to the consumer and to the health care system at large. Although only 2 percent of the U.S. population uses biologics, these drugs account for 40 percent of prescription drug spending nationwide due to their high research and development costs.
In contrast, biosimilars, which are only approved if the U.S. Food and Drug Administration establishes they are as safe and effective as their reference biologic, cost producers far less in research and development than their approved biologic reference products. That means significant savings – an estimated 20 to 30 percent less – which can be passed throughout the health care system. It is estimated that biosimilars will reduce biologic drug spending by at least $54 billion by 2024.
However, a major victory for patients was achieved after more than 200 organizations representing patients, providers and other stakeholders called on CMS in September to assign separate payment codes for each biosimilar drug, the agency changed the policy. Each biosimilar now has a unique billing code, which will lead to increased competition among producers and most importantly, greater choice and affordability for patients.
According to the Biosimilars Forum, the new rule could reduce Medicare costs by $65 billion over the next 10 years. The new rule is expected to lead to savings of 30 percent more than would have been the case under the old rule. For Arkansas, where nearly 600,000 residents depend on Medicare to pay for their prescription treatments, a more competitive biosimilars market could bring much-needed relief to patients – particularly valuable in a year when premiums are expected to rise by as much as 43 percent. Currently, Arkansas spends nearly $10,000 per Medicare enrollee, costing the state more than $5.5 million each year.
With CMS’ rule change in effect, biosimilars have the potential to play a central role in enabling Medicare and the entire American healthcare system to achieve significant savings over the next decade and beyond. In Europe, Australia and South Korea, where biosimilars have been widely prescribed for more than a decade, patients suffering from a range of painful and chronic conditions benefit from these safe and effective drugs every day.
The FDA has already approved nine biosimilars, and dozens more are in the development pipeline. With the new federal policy laying the foundation for a cost-effective and sustainable biosimilars market, Arkansas might be able to contain its unsustainable health care spending. Most importantly, though, the more than 310,000 residents in Arkansas with Medicare prescription drug plans are likely to see increased access to more affordable options to treat painful and long-term ailments. This is a good thing for Arkansans – and for the future of the health of the state.
Juliana M. Reed is President of the Biosimilars Forum.