Biosimilars are readily available in this country and could decrease treatment costs associated with biologic medications, but providers that adopt lower-cost biosimilars often see lower practice profits under today's "buy-and-bill” reimbursement model for infused therapies, which could pose an obstacle to more widespread adoption, according to a Navigant study.
Navigant said this is because private payers, unlike CMS, do not generally incentivize the use of biosimilars through differential reimbursement, which rewards providers for making care decisions based on efficiency, cost, quality and effectiveness. "As a result, adoption of lower-cost biosimilars in today's reimbursement model leads to a reduction in practice profits for most providers," the company added.
For the study, Navigant used a hypothetical scenario where an infused innovator product costs $1,000 per unit dose, and a comparable biosimilar is priced at a 15 percent discount. In this scenario, the average physician office that adopts the biosimilar could lose $9 in gross profit per dose, according to the study. Navigant estimates potential losses for outpatient hospitals and 340B or disproportionate share hospitals at $43 per dose and as much as $79 per dose, respectively. Additionally, the company said individual providers with 50 therapy patients could potentially lose as much as $50,000 annually, and the loss would increase with multiple biosimilars coming to market.
Broad adoption of biosimilar alternatives could decrease providers' profits by as much as $100 million nationwide. "In this environment, private payers will need to meaningfully change their reimbursement scheme, or preferentially incentivize the use of biosimilars, in order to spur adoption. Following the lead of CMS, commercial payers could offer favorable and differential reimbursement of an additional 4 percentage points for physician practices, 8 percentage points for hospitals, or 16 percentage points for 340B hospitals as a means to neutralize the profit loss for providers that adopt biosimilars," Navigant said.
The company added, "With this type of differential reimbursement, payers can minimize an important barrier to biosimilar usage and seek a middle ground where both payers and providers see cost savings and increased profits."
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