On February 4th, the Energy & Commerce Committee’s subcommittee on health held a legislative hearing regarding the implementation of the Biologics Price Competition and Innovation Act, which established a shortened FDA approval process for determining when biosimilar products are considered interchangeable with previously-approved FDA products.  The subcommittee members expressed concerns regarding plans to reduce reimbursement for biosimilar products under Medicare Part B, as set forth in a final rule implementing how the Medicare program plans to reimburse biosimilar products.

Under the final rule, reimbursement for biosimilar products would be calculated by integrating the average price of biosimilar products that copy the brand-name versions. The subcommittee explored how this reimbursement policy could have a negative influence on encouraging additional biosimilars from seeking approval in the future.  For example, Chairman Emeritus Joe Barton (R-TX) explained that biosimilars are different from generics and that “if you don’t allow for some differentiation, . . . you’re not going to create an incentive to do the drug or the biosimilar in the first place.” When Mr. Barton asked whether CMS has any intention to revisit its reimbursement policy in light of these facts, Sean Cavanaugh, a deputy administrator at CMS, responded that the final rule indicates that the agency “will monitor the market closely” and make revisions to the reimbursement policy if necessary.

The industry will have to wait to see whether the subcommittee’s concerns regarding CMS’s final rule regarding the reimbursement methodology for biosimilars comes to fruition. At that time, whether CMS revisits its policy to provide a different reimbursement scheme for biosimilars will likely depend on whether manufacturers have been discouraged from entering the biosimilars market because of the reimbursement policy, the effect the reimbursement policy has on savings for the Medicare program, and access for beneficiaries.