Payment Increases for Biosimilars

On April 16th, 2022, the Inflation Reduction Act of 2022 was signed into law. Section 11403 requires a temporary increase in add-on payment for qualifying biosimilars from 6% to 8% for 5 years. This change was implemented on October 1, 2022, and CMS uploaded pricing files that already include the temporary price increase.

Applicable 5-year period
This increase began on October 1, 2022, for products for which payment was made by September 30, 2022. For other biosimilar products in which payment was made between October 1, 2022 – December 31, 2027, the 5-year period will begin on the first day of such a calendar quarter in which the payment was first made. For example, payments made between October 1, 2022 – December 31, 2022, the 5-year period will begin October 1, 2022, through September 30, 2027.
 
Qualifying biosimilar
A qualifying biosimilar product is defined as a biosimilar biological product with an ASP that is not more than the ASP of the reference product. Also, a biosimilar biological product ASP during a calendar quarter throughout the 5-year period is not more than the ASP of the reference product for such quarter.
 
Add on payment
The temporary price increase applies an 8% of the reference product ASP to the ASP of the biosimilar. This applies to separately payable pass-through and non-pass-through status biosimilars in accordance with the OPPS.
 
Shout Outs

1. Pharmacy and Finance Teams – should review your biosimilar strategy and financial models. CMS 2022 Q4 pricing files were uploaded to reflect the 8% temporary price increase.