OIG Says Increased Use of Biosimilars Could Reduce Part D Spending


Last month, the Office of Inspector General of the Department of Health and Human Services (OIG) released a report concluding that Medicare Part D and Medicare beneficiaries could reduce their expenses through increased use of biosimilars. Specifically, the OIG recommends that the Centers for Medicare & Medicaid Services (CMS) (1) encourage Part D plan sponsors to increase access and use of biosimilars, and (2) monitor coverage of the biosimilar form to identify trends of concern. Let’s unpack the OIG report.

What is a biosimilar?

Biologics are generally large, complex molecules produced in a living system. Known as “biologics,” they are among the most expensive prescription drugs. For example, in 2018, biologics accounted for 40% of total prescription drug spending, even though less than 2% of Americans used biologics.

A biosimilar is a very similar biologic product with no clinically significant differences from its reference product, which is an existing product approved by the United States Food & Drug Administration (FDA). Biosimilars are generally lower cost biologics.

Part D Expenditure on biosimilars

Most biosimilars are administered by a physician and are paid for under Medicare Part B as a medical benefit. But, as new biosimilars come to market, Part D spending in this area is expected to increase. For example, biosimilars for two drugs covered only by Part D – Humira and Enbrel – are expected to be available in the United States in 2023 and 2029, respectively. In 2019, Humira and Enbrel accounted for more than $5 billion in Part D spending, nearly half of all Part D spending on biologics.

The OIG estimates that the increasing use of biosimilars will reduce overall Part D expenditures in the coming years. However, the report cites a number of barriers that potentially limit the overall use of biosimilars:

  • Patients and providers are unaware that biosimilars are available as alternatives.
  • Some providers are reluctant to switch patients who are already successfully using a reference product.
  • Potential confusion of FDA naming conventions, making biosimilars appear inferior.
  • Prescription drug benefit design, including formulary inclusion, tier placement, and overall cost sharing with beneficiaries for biosimilars.

BIG methodology and conclusions

The OIG set out to analyze trends in biosimilar use and spending in Part D. Analysts explored several calculations and estimates on the potential impact of increased biosimilar use on spending in Part D. D between 2015 and 2019. The team also reviewed the 2019 Part D plan forms to understand biosimilar coverage for Part D recipients.

In general, the OIG found that:

  • The use of biosimilars in Part D increased every year from 2015 to 2019. However, biosimilars are used much less than their reference products.
  • As the use of biosimilars increased, Part D spending on biosimilars also increased. But these expenses are still only a small part of the overall Part D expenses on biologics, in general.
  • Part D expenditures and beneficiary out-of-pocket costs for biosimilars, per prescription, were lower than for biosimilar reference products.
  • Increased use of biosimilars could have reduced Part D spending between 18% and 31% in 2019 and beneficiary spending between 12% and 22%, suggesting potential for greater spending reductions in the future .
  • Not all Part D plans covered biosimilars available in 2019, especially those that were introduced recently. Most Part D plans that include biosimilars did not use other plan design tools to encourage the use of biosimilars.

These findings led to OIG recommendations that CMS work to encourage Part D plan sponsors to increase access and use of biosimilars and monitor biosimilar formulary coverage. CMS accepted the OIG’s first recommendation, saying it planned to “examine how demonstration projects could be used to encourage the use of biosimilars” and saying it “will continue to explore other options within its authority to increase access and use of biosimilars”. medications.”

In response to the OIG’s recommendation to monitor form coverage, CMS neither agreed nor disagreed and noted that its “form review process is limited to ensuring that forms provide access to medically necessary treatments and that the forms do not discriminate against certain types of beneficiaries. »

It will be interesting to see what CMS offers in potential demo programs. In the meantime, we will continue to monitor government efforts regarding drug pricing.


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