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HHS Secretary Xavier Becerra, CMS Administrator Chiquita Brooks-LaSure Remark on Implementation of Inflation Reduction Act Provision Addressing Medicare Payments for Biosimilars

Today, U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra and Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure issued the following statements on the implementation of Medicare Part B payment changes for certain biosimilars, one of the first Medicare provisions of the Inflation Reduction Act to go into effect.

Secretary Xavier Becerra: “Today’s action marks a critical step toward reducing health care costs for American families and increasing competition. We’re moving full-speed ahead on Inflation Reduction Act implementation to deliver results for millions of Americans.”

CMS Administrator Chiquita Brooks-LaSure: “CMS is swiftly implementing the historic Inflation Reduction Act to make the new law and the benefits it provides a reality for the people we serve. The temporary Medicare Part B payment increase for qualifying biosimilars that is now in effect will foster competition in the drug marketplace for conditions such as diabetes, cancer, and immune disorders, and will improve access to these life-saving medicines that help keep people with Medicare healthy.”

Additional Background:
According to the United States Food & Drug Administration (FDA), biosimilars are a diverse category of products and are generally large, complex molecules. Biological products may be produced through biotechnology in a living system, such as a microorganism, plant cell, or animal cell, and represent the fastest growing segment of the pharmaceutical industry.

In accordance with section 11403 of the Inflation Reduction Act, CMS is implementing a temporary increase in payment under Medicare for qualifying biosimilars. The new law provides for a temporary increase in the add-on payment for qualifying biosimilars whose average sales price (ASP) is not more than the price of the associated reference biological product. This provision encourages the creation and utilization of biosimilars to compete with original biologic products and incentivizes innovation for less costly access to these important therapies in the United States.

By statute, Medicare Part B generally pays 106% of ASP (ASP plus 6%) for separately payable drugs and biologicals furnished in physician offices, hospital outpatient departments, and ambulatory surgical centers, with some exceptions. ASP is calculated based on manufacturers’ sales to all U.S. purchasers minus manufacturer rebates, discounts, and price concessions (with certain exceptions). Manufacturers report ASP data to CMS quarterly.

Prior to the implementation of the provisions in section 11403 of the Inflation Reduction Act, CMS paid biosimilars a rate of the biosimilar’s ASP plus an add-on of 6% of the reference biological product’s ASP. Under section 11403 of the Inflation Reduction Act, qualifying biosimilars will temporarily be paid ASP plus 8% (rather than plus 6%) of the reference biological product’s ASP for a 5-year period. For existing qualifying biosimilars for which payment was made using ASP as of September 30, 2022, the 5-year period begins on October 1, 2022. For new qualifying biosimilars for which payment is first made using ASP between October 1, 2022, and December 31, 2027, the applicable 5-year period begins on the first day of the calendar quarter during which such payment is made.

The goal of the temporary add-on payment for providers is to increase access to biosimilars, as well as to encourage competition between biosimilars and reference biological products, which may, over time, lower drug costs and lead to savings to beneficiaries and Medicare.

CMS has posted the quarterly Medicare Part B drug pricing file that reflects the temporary increased amount for qualifying biosimilar biological products. The October 2022 Medicare Part B quarterly drug pricing file can be accessed at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice.

Public payment files for biosimilars in the hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) can be found at the following links: 

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Author: HHS Press Office

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