It’s been two years since the Inflation Reduction Act (IRA) was passed, and, while the law's Medicare-negotiated price cuts haven’t yet gone into effect, a change surrounding biosimilar reimbursement rates was instated in 2022.
The new provision was meant to dismantle financial disincentives to biosimilar adoption and save the U.S. healthcare system billions of dollars, but has the legislation worked to plan so far?
Drug development consultancy Certara sought to find out. In its “Boost or Bust?” report, the company surveyed oncology account staff at 79 healthcare facilities—including a mix of hospitals and community infusion sites—on their use of 17 biosimilar products targeting five reference medicines (Roche’s Avastin, Herceptin and Rituxan as well as Amgen’s Neupogen and Procrit).
On top of investigating the effectiveness of the IRA biosimilar reimbursement measure, the findings also offer a glimpse into the role biosimilars play in cancer treatment today.
Reimbursement add-on
The Medicare provision (PDF) in question consists of a temporary, five-year boost in Medicare Part B reimbursement rates for biosimilar products. The standard Part B reimbursement is 106% of a product's average selling price (ASP), but, with the new “enhancement” under the IRA, 108% of an originator product’s ASP is reimbursed when biosimilars are used.
Originally, the measure was expected to “increase competition, promote access and ultimately save American taxpayers and patients money,” executive director of the Biosimilars Forum, Julie Reed, said in 2022, citing an IQVIA study that predicted the add-on payment could cut healthcare costs by up to $8.2 billion over a decade.
The IRA provision didn’t attract as much fanfare as other aspects of the legislation did. While the majority of Certara's survey respondents said they were at least partially aware of the new measure, 18% were listed as unaware. Those who answered the survey from larger healthcare facilities tended to "rate themselves and their facility’s leadership as more informed” than those at smaller locations, the Certara team noted.
The policy in practice
Out of the 17 biosimilars featured in the survey, the average number of the products used per facility is six, with respondents using Herceptin copycats at a slightly higher rate than the others, according to Certara. That might speak to the market maturity of Herceptin biosimilars, which launched in 2019.
Seven treatment facilities don’t use any of the listed biosimilars, a practice attributed to provider choice and reimbursement challenges, according to the report. Those “no-biosimilar facilities” reported commercial insurance as their most common payer type, which could point to the higher “relevance” of biosimilar drugs for Medicare patients, according to Certara.
While Certara did note a link between greater awareness of the updated reimbursement rates and higher use of multiple different biosimilars, the new IRA measure led to what 45% of respondents qualified only as a “slight increase” in biosimilar utilization. However, 89% of respondents believe biosimilar utilization will only increase over the next five years, and 74% think that the IRA add-on payments will be a contributing factor, according to the report.
All things considered, Certara qualifies the legislation’s impact so far as “limited." Certara concluded that the boosted payments have contributed a “small but measurable” reduction in U.S. healthcare spending. Still, the next three years will be key to watch, the researchers said.
“Over the next three years, the real test of the provision will be if it can overcome the perverse incentives to use higher-priced originator products over biosimilars,” the Certara team noted in the report.
Biosimilar developments outside of the IRA
Before the IRA became law, the biosimilar industry in the U.S. lagged original expectations, prompting officials and others to offer reasons the copycat biologics weren't gaining traction—and to suggest policy changes. But, in 2023, a major test for the market came with the arrival of Humira biosimilars.
Although Humira still holds the majority of market share after more than a year of direct competition, some biosimilars to the megablockbuster have proved successful, pushing companies like Sandoz to notable recent revenue gains. CVS Caremark and Cigna’s Express Scripts have each opted to knock AbbVie’s branded Humira off of major formularies in favor of cheaper biosimilar options, which could cause Humira’s grasp on the market to continue to slip.
Outside of Humira, other high-selling drugs can expect their own biosimilar competition soon as well. Amgen’s version of Johnson & Johnson’s autoimmune blockbuster Stelara can launch Jan 1., 2025, with others lined up from drugmakers such as Alvotech and Teva, Samsung Bioepis and Biocon.