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.
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