Reports

Biosimilars in Medicare Part D: pricing dynamics and considerations

The Drug Pricing Lab engaged Milliman to prepare a report summarizing the pricing dynamics affecting utilization of biosimilars in the current Medicare Part D marketplace and under the proposed Part D benefit design in the Build Back Better Act.

This report was commissioned by the Drug Pricing Lab.
Download Report

Authors

Originally published on 12/14/2021 in Milliman

The market for biosimilars

The Drug Pricing Lab engaged Milliman to prepare a report summarizing the pricing dynamics affecting utilization of biosimilars in the current Medicare Part D marketplace and under the proposed Part D benefit design in the Build Back Better Act.

Biosimilars are biological products that are highly similar to and have no clinically meaningful differences from an existing reference biologic. The majority of biosimilars in the US are currently covered under Medicare Part B. This analysis was viewed through the lens of Humira, the largest biologic drug in Part D spend which is set to face biosimilar competition in 2023.

Pricing dynamics affecting biosimilar utilization in the Medicare Part D market:

  • Rebate dynamics: Products with high list prices and high rebates may be favored over other products with equivalent net prices under the current Medicare Part D design.
  • Plan break-even prices: Under the current Medicare Part D design, biosimilars offering little to no rebates would need  list prices at least 50% lower to match reference biologics offering 25% rebates.
  • Build Back Better Act’s Part D redesign: Where $2 in discounts is equivalent to $1 in rebates in the current design, $2 in discounts would be equivalent to $1.50 in rebates in the proposed design. This means that the breakeven relationship between discounts and rebates for plans would decrease from 2:1 to 4:3 for biologic drugs costing $6,000 per month under the redesigned Medicare Part D benefit.

Milliman also explored considerations for key stakeholders: the plan sponsor, biosimilar drug manufacturers, and regulatory bodies.

Read the full whitepaper here.

Share

Authors

Research & Insights

We conduct non-partisan, independent research, and make our work accessible and informative to policymakers and the general audience alike. Browse our featured research or explore our work by article type.

Medicare Part B Premium Dynamics Explained
The Drug Pricing Lab commissioned Milliman to prepare a report exploring the impact of changes in Medicare Part B program costs on beneficiaries’ premiums and Social Security payments. This report focuses on the 2022 Part B premium for beneficiaries with various income levels to illustrate the payment dynamics and discusses the implications for related programs.
Milliman 12/23/2021
Comparing Factors that Influence Pharmaceutical Pricing and Access in the…
Drug prices in the United States are some of the highest in the world, which has triggered several policy proposals aimed at adopting pricing strategies used by other countries.
Drug Pricing Lab 12/20/2021
Biosimilars in Medicare Part D: pricing dynamics and considerations
The Drug Pricing Lab engaged Milliman to prepare a report summarizing the pricing dynamics affecting utilization of biosimilars in the current Medicare Part D marketplace and under the proposed Part D benefit design in the Build Back Better Act.

This report was commissioned by the Drug Pricing Lab.
Milliman 12/14/2021
Evaluating Industry’s Drug Pricing Claims
A closer look at three of PhRMA’s most cited talking points.
Drug Pricing Lab 11/18/2021
Mapping conflict of interests: scoping review
A scoping review of the literature to identify all known ties between the medical product industry and the parties and activities in the healthcare ecosystem.
Drug Pricing Lab 11/03/2021
Production Plus Profit Pricing (P-quad) FAQ
08/17/2021
What A Waste! The National Academy Of Medicine’s Report On…
Why Congress should not follow the National Academy of Science, Engineering, and Medicine’s recommendation to remove the JW modifier.
Health Affairs Blog 07/09/2021
Medicare Must Study Unproven, Expensive Alzheimer’s Drug
Medicare cannot indiscriminately cover the cost of Aduhelm for the treatment of Alzheimer's disease without first evaluating whether it truly works.
Bloomberg Opinion 06/15/2021
Value-Based Management of Specialty Drugs: Practical Considerations and Implications for…
Not all approaches are suited to meeting policy makers and health plans’ goals of managing specialty drugs based on their value. Researchers conducted a qualitative study with Blue Cross Blue Shield plans interested in implementing value-based specialty pharmacy management to observe the plans’ objectives, strategies, and factors influencing their ability to execute on these strategies.
AJMC 05/13/2021
Instead of debating 'first-shot' vs 'set-aside' vaccine approaches, hospitals' study…
Hospitals could start studies of their own employees to answer important questions, including whether the first-shot approach has downsides when compared to the set-aside strategy.
STAT 01/04/2021
Trump's Drug-Pricing Ideas Would Cost Taxpayers a Bundle
Meanwhile, pharmaceutical companies would stand to make a lot more money.
Bloomberg Opinion 09/29/2020
We can't tackle the pandemic without figuring out which Covid-19…
There may be several Covid-19 vaccines by winter, but there will also need to be a study comparing the viruses to one another as part of rolling out widespread vaccination.
STAT 09/24/2020

Featured News

See All News
Drug Pricing Lab 09/01/2021

Senate Moves Forward with $1.2 trillion Infrastructure Bill, Includes Funding Offset from Bach’s Drug Vial Waste Research

The infrastructure bill includes a drug waste provision from the Recovering Excessive Funds for Unused and Needless Drugs (REFUND) Act, which requires manufacturers to rebate the amount wasted back to CMS. An estimated $3 billion over 10 years can be recouped and invested in roads, bridges, and other infrastructure initiatives.
Read Article
Newsletter

Stay up to date on our work and news