Medicare Part D Requirements for Biosimilar Follow-On Biological Products

Released by the Centers for Medicare and Medicaid Services on March 30, 2015,_Statements_and_Analysis_-_docs/2015/cms_guidance_biosimilars_part_d_3_30_2015.pdf

In a March 30, 2015, memorandum to Part D sponsors, the Centers for Medicare and Medicaid Services (CMS) clarified the application of Part D formulary review policies, low-income subsidy (LIS) and catastrophic cost sharing rules, and Coverage Gap Discount Program (Discount Program) requirements regarding biosimilar products covered under Medicare Part D. These clarifications are summarized below. The information in the memorandum is not intended to apply to “interchangeable” biological products; CMS has suggested that it may provide further guidance in this area in the future.

CMS will evaluate formulary change requests involving biosimilars on a case-by-case basis to ensure they meet the requirements of the CMS formulary review and approval process. Part D plans’ pharmacy and therapeutics committees will be expected to review biosimilars for inclusion on the formulary.

In general, a reference biological product and biosimilar product will not be considered as different drugs for the purposes of satisfying the two distinct drugs requirement for each of the submitted categories and classes. This means that if both the reference biological product and a biosimilar product are available in a particular category and class, at least one other product must be included on the formulary to satisfy the CMS requirement for two drugs for every category and class.

Formulary changes involving the addition of the biosimilar and removal of the reference product usually will be considered a non-maintenance change, as defined in Chapter 6 of the Medicare Prescription Drug Benefit Manual:

Part D sponsors may remove Part D drugs from their formulary, move covered Part D drugs to a less preferred tier status, or add utilization management requirements. For these additional types of formulary changes approved by CMS, Part D sponsors should make such formulary changes only if enrollees currently taking the affected drug are exempt from the formulary change for the remainder of the contract year.

Biosimilars are subject to the higher maximum copayments for LIS-eligible individuals applicable to all other Part D drugs. Biosimilars do not meet the definition of “multiple source drug” under Medicare Part D law that applies to conventional generic drugs. Instead, biosimilars are classified as single source products, similar to conventional brand name drugs. (Note that the Medicaid program also classifies biosimilars as single source agents; Medicare Part B payment policy suggests that biosimilars are more similar to multi-source agents. These differences exist because of provisions in the laws implementing biosimilars payment policy and CMS’ interpretation of the laws.)

Biosimilars are non-applicable drugs for purposes of establishing coverage gap cost sharing under the basic Part D benefit; they are not discounted or otherwise subject to Discount Program requirements. This provision is included in the federal statute for enacting biosimilars.