CMS Rule On Biosimilar Payment Could Have Serious Side Effects

The Obama administration and leading members of Congress are clashing over a new Medicare payment rule that could compromise patient care, impede development of a fledgling part of the biologics industry, and make it more difficult to track patient safety issues.

At issue is government payment policy for a new class of drugs called “biosimilars”—drugs that are similar but not identical to the original brand name biologic drug.

Biologics are complex large-molecule proteins created in the laboratory but derived from living organisms. These molecules function within the body’s own biological processes to treat cancer, diabetes, rheumatoid arthritis, and other diseases. Biosimilars are reverse-engineered proteins with unique manufacturing recipes and are developed to mimic the effect of the original biologic in patients.

However, the physical attributes of the biosimilar drug will never be exactly the same as of the original biologic or any other biosimilar drug. Each biologic drug has its own unique biochemical signature, and this diversity can potentially impact effectiveness and side effects for patients.

The Centers for Medicare and Medicaid Services (CMS) finalized a rule October 30 explaining how Medicare will pay for physician-administered biosimilar drugs. It decided to dump all biosimilars that mimic the same original brand name biologic into the same category. This is identical to the way it treats cheap generic pills which, unlike biosimilars, can be mass-produced as exact chemical copies.

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About the author

Grace-Marie Turner is president of the Galen Institute, a public policy research organization that she founded in 1995 to promote an informed debate over free-market ideas for health reform. Full biography