The House Energy and Commerce Subcommittee on Health held a hearing titled “Examining Implementation of the Biologics Price Competition and Innovation Act” to receive input from and ask questions of both CMS and the FDA about implementation efforts to date, as well as next steps. At the hearing, Janet Woodcock, Director of the FDA’s Center for Drug Evaluation and Research (CDER), and Sean Cavanaugh, Deputy Administrator and Director, Center for Medicare, CMS, in written and verbal statements addressed concerns regarding the clinical and regulatory approaches to biosimilars within each agency.
According to both the FDA and CMS, the agencies collaborated when needed. The FDA’s focus was on the science and CMS’ focus on beneficiaries. However, both agencies participated in a semblance of parallel review where the FDA approved a biosimilar and CMS made coverage decisions simultaneously.
Background. The Biologics Price Competition and Innovation Act (BPCIA), enacted in 2010 as Section 7002 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), established a new abbreviated licensure pathway at the FDA for biological products determined to be “biosimilar to” or “interchangeable with” previously licensed biologics (see Shall we dance? Biosimilars step toward new legal and regulatory future, August 5, 2015). With interchangeability a hallmark of biosimilars, differences in clinical outcomes tend to restrict the use of the innovator’s original safety and efficacy data for evaluation and approval of the biosimilar (see The challenge of the FDA’s biosimilars regulation, August 20, 2014).
The ACA, in addition to creating an abbreviated licensure pathway for the approval of biosimilars, also includes a provision on the establishment of Medicare payment policies for biosimilars, setting the add-on payment rate for biosimilar products under Medicare Part B at 6 percent of the average sales price of the reference product.
FDA implementation. In 2012, the Biosimilar User Fee Act (BUFA) was enacted to support the FDA’s work related to the development and review of these products, the first of which was licensed in March 2015 (see FDA enters new era with approval of first biosimilar, March 11, 2015). In addition, the agency has issued several guidance documents and proposed regulations setting forth its current thinking on a number of closely watched policy determinations that will impact market entry and patient safety. The FDA noted that its biosimilar review program has continued to mature over time. As of January 21, 2016, 59 proposed biosimilar products to 18 different reference products were enrolled in the Biosimilar Product Development (BPD) Program.
Rep. Frank Pallone, Jr. (D-NJ) noted the criticism directed towards Congress about the slow pace of FDA actions regarding biosimilars and asked if the FDA had sufficient funds. In response, Woodcock stated that Congress did not appropriate any additional funding for biosimilar development. Instead, the FDA was directed to use money from other existing programs to seed the biosimilar user fee program; as a result, it was not until 2013 that fees were collected to the tune of $6 million. In fiscal year (FY) 2015, the FDA collected over $23 million in biosimilar user fees. The FDA anticipated issuing more guidance this year, but staffing issues could present some problems. Pallone stated that it sounded as if the FDA needed congressional appropriations, as industry fees did not seem to be enough. Woodcock stated she could not comment on additional appropriations.
She agreed that more work needed to be done by the FDA. The agency would continue to meet with companies to provide advice for individual development programs. Woodcock highlighted that over the past year, the number of FDA meeting requests and marketing applications grew. The FDA in FY 2016 will conduct education and outreach targeting health care professional societies and patient advocacy organizations to increase awareness and understanding of biosimilars. In addition, the FDA plans to communicate information in various formats to consumers as more biosimilar products are approved and enter the marketplace.
Medicare reimbursement. In preparation for additional biosimilar approvals, CMS published final rules setting the stage for how the Medicare program will reimburse biosimilars (see CMS updates physician payment and quality reporting for 2016, November 18, 2015, and OPPS payment update a net cut for many, November 13, 2015). Within these rules CMS issued regulations setting the stage for how the Medicare program will reimburse for biosimilar products. Questions have been raised about CMS’ interpretations of several statutory provisions guiding reimbursement that could seemingly conflict with and potentially undermine FDA decisions on various matters.
For instance, Chairman Joe Pitts (R-Pa) asked if CMS undermined the FDA by grouping all biosimilars that share the same reference product under the same Healthcare Common Procedure Coding System (HCPCS) code. Each product would be reimbursed under the same code, regardless of whether the FDA made an interchangeability determination or if the biosimilar shares the same indications as the reference product. In addition, questions were raised about seeming inconsistencies between how Medicare Part B, Part C, and Part D treated biosimilars.
CMS disagreed that there was a possibility that its actions undermined the FDA. CMS noted that its billing and coding of biosimilars was statutorily driven; physicians did not look at a specific drug code for billing, but the general code. Moreover, the FDA’s perspective was a science-driven one, and the FDA was able to track biosimilar naming convention for specific drugs, including nuances based on interchangeability, independent of how CMS categorized the biosimilars for billing and coding.
Cavanaugh highlighted the fact that CMS would continue to ensure Medicare beneficiaries have access to biosimilars and other innovative treatments that receive FDA approval. The agency would look to create payment policies that support innovation, access, and affordability of biosimilars. CMS would also monitor developments as more biosimilars enter the market and would consider future refinements to policy as needed, based on actual experience with the new segment of the market.
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