Reimbursement of Biosimilar and Biosimilar-similar ESAs
This article was originally published in RPM Report
Executive Summary
Affymax received FDA approval for the first new ESA in years. Now the company is trying to secure favorable reimbursement for its product, Omontys. The case raises the question of how CMS will treat biosimilar ESAs.
The FDA approval of Affymax’ once-monthly erythropoiesis-stimulating agent Omontys (peginesatide) brought with it another question: how will the product be reimbursed?
On April 13, the company announced the Centers for Medicare & Medicaid Services had given the company a Health Care Common Procedure Coding System (HCPCS) temporary Q code for reimbursement purposes.
Issuing a Q code for a newly approved technology is a relatively standard procedure, and one that precedes the awarding of a permanent J code by CMS.
While it appears that Omontys is on track for a permanent reimbursement code, getting a permanent code is not simply a check-the-box exercise
According to CMS, Q codes are not guaranteed to be converted to J codes.
Generally, Q codes allow the HCPCs workgroup the flexibility to assign a specific billing code to a product/service during the year on a Quarter-month rather than annually in January. CMS says this is useful when the workgroup identifies a programmatic operating need for a specific billing code assignment sooner than the normal annual HCPCS cycle. CMS says in many cases, if the Q code is assigned during the year, it would be converted to a permanent code (not always J-code) the following January. But there certainly is “no guarantee.”
That point of view from CMS underscores the relative uncertainty around securing advantageous reimbursement for a new product.
On the coverage side, CMS Director of the Coverage Analysis Group Louis Jacques laid out a line of thinking on coverage policy as it relates to biosimilars in the ESA category and a product like peginesatide (Also see "Roche's New EPO: "White Knight" or Wolf in Sheep's Clothing?" - Pink Sheet, 1 Feb, 2007.).
One could make the argument that Omontys is a biosimilar-similar—that is the drug approaches the biosimilar model in that it offers a convenience advantage due to the less frequent dosing. That convenience advantage was cited during FDA’s advisory committee review of Omontys in December 2011.
Follow-on ESAs are likely to be among the first products to test the new biosimilars pathway assuming that provision is upheld in the Affordable Care Act currently under Supreme Court review (Also see "The Supreme Court and Biosimilars: What if it All Goes Away?" - Pink Sheet, 11 Apr, 2012.).
At The RPM Report’s FDA/CMS Summit meeting that came a day after the Omontys panel review, Jacques characterized the situations with biosimilars coverage policy and ESAs as such:
“CMS national coverage determinations have generally been about a class of therapies or a class. I think if one is developing some sort of a biosimilar or something in that vein, the clearest thing to do is to look at the wording of the national coverage determination itself and to ask yourself, in this particular case, is this an erythropoiesis stimulating agent? If it’s not an ESA, then one could make the argument that it’s either subject to a different policy, or potentially there is no policy at all about it. On the other hand, if you would say yeah, this walks like an ESA and talks like an ESA, then one should probably start the conversation from, it is extraordinarily likely that we fall under the purview of a national coverage determination.”
Both the labels for Amgen’s Aranesp and Omontys specifically state the two products are ESAs:
The label for Aranesp reads: Aranesp is an erythropoiesis-stimulating agent (ESA) indicated for the treatment of anemia due to chronic kidney disease (CKD) in patients on dialysis and patients not on dialysis.
The label for Omontys states: Omontys is an erythropoiesis-stimulating agent (ESA) indicated for the treatment of anemia due to chronic kidney disease (CKD) in adult patients on dialysis.
Nevertheless, given the differences in makeup of the two products, it’s a fair question for CMS to ask whether Omontys and future biosimilar ESAs can be treated in the same fashion for reimbursement purposes.
Remember, CMS officials have been on the public record saying that an FDA-approved product doesn’t guarantee coverage and reimbursement in Medicare. ReGen’s Menaflex knee replacement device is often cited as an example of why: FDA eventually rescinded the approval after problems with the review surfaced.
Assuming CMS is of the FDA view that peginesatide is without question an ESA, there are potential challenges for Amgen.
To recall, in March 2011, CMS decided not to proceed with a national coverage determination for erythropoiesis-stimulating agents in patients with chronic kidney disease. In the agency’s memo, it cited insufficient evidence to warrant limiting coverage through an NCD.
“Despite an exhaustive search, we identified no high quality, randomized clinical trials that were of sufficient design, duration, and power to confidently conclude that ESAs provide clinical benefits other than increasing hemoglobin, a putative intermediate clinical surrogate.”
“Despite an exhaustive search we identified no high quality, randomized clinical trials that were of sufficient design, duration, and power to definitely determine the absolute risk of adverse events including death, tumor progression, and cardiovascular-thromboembolic events in patients with renal insufficiency and/or renal failure, in geriatric patients (the largest growing renal population segment), using ESAs”
If CMS was inclined to reopen a national coverage analysis process in the class, peginesatide could provide the opening to do so.