Medicare Value-Based Model May Provide Test For Biosimilars – At Some Point

Rheumatoid arthritis will be included in broaden clinical categories for year two of the value-based insurance design pilot; it may be an interesting test case for biosimilars.

The Centers for Medicare and Medicaid Services (CMS) recently announced changes to its value-based insurance design (VBID) model for 2018 – year two – and it looks like it’s going to get bigger in several ways.

First, the Medicare Advantage/MA prescription drug plan model will include two additional clinical categories. Rheumatoid arthritis and dementia will be added in 2018 to a group of seven existing chronic conditions from the first year of the model for which plans may offer benefits.

The clinical category conditions that will be used in the model will be:

• Diabetes
• Chronic obstructive pulmonary disease (COPD)
• Congestive heart failure (CHF)
• Past stroke
• Hypertension
• Coronary artery disease
• Mood disorders
• Rheumatoid arthritis (starting in 2018)
• Dementia (starting in 2018)

“VBID generally refers to health insurers’ efforts to structure enrollee cost sharing and other health plan design elements to encourage enrollees to use high-value clinical services – those that have the greatest potential to positively impact enrollee health,” CMS said in an Aug. 10 announcement.

In other words, VBID builds on the formulary tiering sysem to prefer generics or highly effective new drugs, for example. (Also see "CMS To Test Value-Based Insurance Design; Diabetes, COPD Among Target Diseases" - Pink Sheet, 24 Sep, 2015.)

The addition of rheumatoid arthritis makes sense for the value design given the range of therapeutic options in the group and the fact that RA now represents one of the top if not the top spending categories in the so-called “specialy” group or tier of drugs.

Biosimilars Could Be In Pilot, If They Launch

But the timing of the addition is interesting for another reason: there will likely be two RA biosimilars – etanercept and adalimumab – that would theoretically be covered under the Medicare prescription drug benefitt at that point. The question is whether they will be launched and commercially available in the US.

Amgen has patent protection on Enbrel (etanercept) through 2029. (Also see "Biosimilar Litigation: Battles Continue Over Launch Notification, Access To FDA Info" - Pink Sheet, 26 Jul, 2016.) AbbVie’s Humira (adalimumab) primary US patent is scheduled to run out on Dec. 31, 2016 but AbbVie has said the drug could be protected from biosimilar competition into the early 2020s. (Also see "AbbVie v. Amgen Round One: Humira Biosimilar Infringes 10 Patents, Suit Claims" - Pink Sheet, 5 Aug, 2016.)

Biosimilar versiions of Enbrel and Humira from Sandoz and Amgen, respectively, received unanimous recommendations for approval from FDA’s Arthritis Advisory Committee during a two-day meeting in July. (Also see "Amgen's Humira Biosimilar Gains Nod From Panel Perplexed By Regulatory Pathway" - Pink Sheet, 12 Jul, 2016.) and (Also see "Sandoz Steers Enbrel Biosimilar Away From Equivalence Quandary With Reanalysis" - Pink Sheet, 11 Jul, 2016.)

The decision deadline for the Enbrel biosimilar seems to have been in June, but review of the applciation appears behind. Amgen has disclosed the user fee deadline for its biosimilar of Humira is Sept. 25, 2016.

Both drugs account for a high proportion of spending in Medicare Part D. Humira and Enbrel each accounted for $1.2 billion in Medicare Part D spending in 2014, or a total of $2.4 billion, according to CMS’ Medicare Dashboard released in December 2015. The agency said the drugs were specifically chosen for the dashboard due to the high overall total costs to the Medicare program.

Medicare in general has taken a pro-biosimilars policy stance so Part D will be looking at biosimilars very closely following their broader commercial launch.

In a 2015 bulletin for example, the agency endorsed the potential uses of biosimilars in Part D. “Biosimilars may provide Part D sponsors with new products that create formulary design options to help control costs while still ensuring beneficiaries have access to the medications they need.”

In fact, CMS said the reference and biosimilar products would not be considered as different drugs for the purposes of satisfying the two “distinct drugs requirement” for each of the categories and classes. CMS said biosimilars can be added to plan formularies “at any time as a formulary enhancement.”

Abandoning Uniformity To Test Value

There is a stopgap measure for innovators in that Pharmacy & Therapeutics (P&T) Committees would have to review all changes related to a biosimilar. “Formulary changes will be evaluated, as are all non-maintenance changes, on a case-by-case basis, and allowed if the formulary continues to meet the formulary review standards with the corresponding addition of the biosimilar,” CMS said in the bulletin.

What differentiates the VBID demonstration, according to CMS, is the ability to test flexible value designs outside of a “uniformity” requirement for MA plans offering the drug benefit.

“The existing Medicare Advantage 'uniformity' requirement generally requires that an MA plan’s benefits and cost sharing be the same for all plan enrollees.  Because of this, clinically-nuanced VBID approaches have generally not been incorporated into MA or MA-PD plans,” CMS says in the VBID update announcement. “The model will test the hypothesis that giving MA plans flexibility to offer supplemental benefits or reduced cost sharing to targeted groups of enrollees with CMS-specified chronic conditions in order to encourage the use of services that are of highest value to them, will lead to higher-quality and more cost-efficient care.”

To be clear, the five-year VBID model has not actually started yet: it begins on Jan. 1, 2017 and CMS will announce the participating MA plans next month.

In its first year, CMS will test the model in seven states:

• Arizona
• Indiana
• Iowa
• Massachusetts
• Oregon
• Pennsylvania
• Tennessee

Beginning Jan. 1, 2018, CMS will also test the model in

• Alabama
• Michigan
• Texas

That would close to double the target MA population of the model in its second year.

So the inclusion of RA as a clinical condition may set a perfect test case for biosimilars in a value-based insurance design world. The question is whether there will be any biosimilars available to test before the model runs out.