Inflation Reduction Act proves positive boost for biosimilars

For the pharma industry, the IRA has made headlines due to it allowing price negotiations on top-selling treatments. However, Ben Hargreaves finds that another provision within the Act was designed to encourage biosimilar uptake, and it seems to be working.

The US political system has settled on a consistent target of campaigning over the last few election cycles: the pharmaceutical industry. The centre of the debate has been on the cost of healthcare and the pricing of treatments that play a role in this. With the Inflation Reduction Act, the Biden-Harris administration took steps to give Medicare the ability to negotiate the pricing of some of the most commonly delivered treatments.

Another notable action of the IRA was to try to encourage the prescription of biosimilar treatments. Through the IRA, the Administration attempted to do this by allowing the Centers for Medicare & Medicaid Services (CMS) to provide a 2% payment increase for using qualifying biosimilars, which was effective in October 2022. Certara recently evaluated the impact of the IRA’s measures on biosimilars to determine whether this change has helped or hindered uptake.

Playing catch up

The importance of biosimilars within the IRA is based on the potential savings they are able to deliver to healthcare systems. Biosimilars are drugs that have a similar structure and effectively the same treatment outcomes when compared to their originator, biologic product. The approval and introduction of biosimilar products onto the market is an effective way to create an alternative to the comparator product, thereby producing a reduction in price through competition.

In Europe, where authorities acted quickly to ingrain these treatments into the regulatory framework, biosimilars have managed to provide €50 billion in savings since 2012, according to IQVIA. Over a similar period, it was found that biosimilars accounted for a cost reduction of $12.6 billion in the US, representing an underperformance when compared to Europe. When considering that the North American market is more than double the size of the European market, it shows how much of an opportunity is left for biosimilars to make a significant impact.

One of the reasons that there is such a difference is because of how quickly Europe embraced biosimilars, being the first to approve biosimilars and then maintaining a steady rate of approval. However, the US market is beginning to mature and the recent introduction of biosimilars to Humira (adalimumab) could prove a turning point for biosimilar revenue generation.

Providing incentive

However, despite the potential for savings, there has been a slow shift in switching to biosimilars due to the additional administrative burden. If the biosimilar product does not offer a substantial enough reimbursement benefit, the healthcare provider may choose to avoid moving patients from their existing treatment simply by avoiding the complexity involved.

This is why the IRA offers to reimburse 108% of the originator product’s Average Selling Price (ASP), a boost on the standard reimbursement of 106% of ASP. The additional savings provided could be enough to gently encourage providers to switch to a biosimilar product. In the long-term, once biosimilars have become an accepted part of the system, there may be a reduced need for such incentives, as familiarity and understanding of the products could be established – with the latter factors remaining an issue for uptake. In the IRA, the provision allows for this added 2% reimbursement to be in place for a temporary, five-year term.

Broad awareness

To understand the impact of this provision after two years of being in place, Certara surveyed 79 facilities about 17 oncology and supportive care biosimilars, and five reference products. The findings revealed that stakeholders are ‘moderately aware’ of the changes brought about by the IRA, with a comprehensive 95% of respondents suggesting their administration is at least partially aware of the provision. The report found that facility size and awareness are correlated, with respondents from larger facilities being more likely to rate themselves informed about the reimbursement plans when compared with smaller facilities.

The survey found broad utilisation of biosimilars, with 91% using at least one of the biosimilars referenced. Of the 17 biosimilars included, the average number used per facility was six. The facilities that indicated no use of biosimilars cited reimbursement challenges and provider choice as the principal reasons for not adopting the products.

Certara also inquired as to the reasons for the facilities’ use of biosimilars and, overwhelmingly, the reason was net price. The respondents cited net price and contracting as the most common reason (65%) for use, with clinical equivalency appearing as the next most important reason (45%).

The IRA impact

Importantly for the changes to the IRA, 32% of respondents noted that reimbursement incentives provided by the CMS were also a major driver of biosimilar use. Even more significantly, there was a link between greater familiarity with IRA add-on payments and the number of biosimilars used in a facility. At those facilities where respondents suggested leadership was highly aware of the IRA change, there were an average of eight biosimilars used; by comparison, at those where there was a low or complete lack of awareness, the average worked out at 5.4 biosimilars used.

When asked directly about whether IRA’s reimbursement enhancement had led to changes in biosimilar utilisation, a large part of the respondents stated that it had led to a slight increase (45%). There were also 14% who suggested that it had led to a significant increase. Only 21% responded that there had been a significant or slight decrease, with 20% noting that there had been no change. However, as the reimbursement period is set to last five years, an important metric is how this could be set to change over the coming years. A large majority (89%) believe that biosimilar use will increase in the next five years, with 74% of respondents of the opinion that the IRA add-on payments will be a factor in this increase.

“Oncology and supportive care biosimilars have achieved significant market share, saving the US healthcare system millions of dollars. While most of these savings are attributable to other causes, our primary research and market data analysis suggest that the IRA’s Medicare reimbursement boost for qualifying biosimilars is a small but measurable contributing factor,” the report authors concluded.