Keeping you updated on the latest Medicare and Part D news

Leave a comment

OIG: Current Provider Databases Present Vulnerabilities for CMS

The Office of  Inspector General reviewed individual provider data in both the NPPES and PECOS databases. They found that the Medicare provider data were often inacurate, inconsistent or incompplete. They concluded that the current state of provider data along with insufficient oversight place the integrity of the Medicare program at risk. 

Read the complete report here


Leave a comment

Summary of Biologics

Reviewed by Polina


 Exclusivity vs Patent Protection

  • Patents and exclusivity work in a similar way but are different from one another.
    • Patents are granted by the patent and trademark office and may expire before the drug even goes on the market or only a few years after the release.
    • Exclusivity is granted by FDA and applies starting from the time the drug is released onto the market. (FDA website)


  • The Biologics Price Competition and Innovation Act (BPCIA) of 2009 established a pathway for licensing competing versions of biologics, allowing the approval and marking of follow-on biologic drugs in the US.
    • Follow-on biologics are not exactly equivalent to the originals, so they are also called “biosimilars”
    • It established a 12-year period of exclusivity for new biologic drugs.

 Biologics Market

  • Today, at least 20% of the drugs on the market are biologics and many more are in the pipeline. (CRS) It is projected that by 2014, biologics will comprise 50% of the top-selling drugs. (CRS)
  • Average costs for biologic products are estimated to be around $16,000 per year.
  • Spending on biologics in 2011 in the US accounted for 30% of total spending (IMS)
  • In pharmacies, biologics accounted for 23% of total spending (IMS)
  • The overall proportion of off-patent biologics is estimated to be at about 10%
  • If the competition from biosimilars resembles brand-generic competition in the small molecule drug market, about 10% of biologics will lose patent protection each year

 Effect of introducing competition from follow-on biologics (FOBs)

  • Various estimates put the discount off brand biologics prices at 5-30% (most are between 10-25%) (Avalere)
    • CBO estimates biosimilars would be priced about 25% below brand-name counterparts, and after several years, could be priced as much as 40% below the brand price
    • The Federal Trade Commission hypothesizes that competition between a biologic drug and an FOB is more likely to resemble brand-to-brand competition than brand-generic competition for the following reasons
      • The high fixed cost of manufacturing follow-on biologics will limit the number of competitors entering in to the follow-on market. The FTC estimates about 2-3 competitors for a given biologic.
      • Since follow-on biologics will not be designated as “therapeutically equivalent,” they will acquire market share at a slower rate than small-molecule generic drugs
      • It may also be difficult for FOBs to acquire market share due to concerns about safety and efficacy. Since FOBs will be slightly different from the original biologic, doctors might limit their prescriptions to newly diagnosed patients to avoid having current patients react differently to the FOB

Similar studies

  • Other estimates have suggested projected savings from $42 billion to $108 billion over the first ten years of competition in the biosimilars market (GPHA online)
  • Assuming the first year of entry of biosimilars is 2013, the savings for the Federal Government from 2013 to 2017 would be 3.6 billion. (Avalere)
    • This study projects total spending on biologics using the National Health Expenditures (NHE) data, which is calculated by the Office of the Actuary at CMS. It attributes a portion of the costs to Federal Government programs using estimates of the Federal share of pharmaceutical spending from NHE data. Using the portion of Federal spending, the authors estimate Federal saving from follow-on biologics

 Biologics and Part D

  • Since biologics are so expensive, most beneficiaries using biologics will reach the coverage gap within a few months. There is no risk for plans during the coverage gap, and since their liability is limited in the catastrophic phase, plans may have little incentive to limit their beneficiaries’ use of biologics or create incentives for them to use FOBs (Medpac)
  • LIS recipients make up a disproportionately large share of biologics users under Part D. Because LIS beneficiaries have nominal cost sharing and no coverage gap, they would have little incentive to ask their physicians to prescribe FOBs (Medpac)
  • Plans risk experiencing selection bias if they provide more generous coverage of biologics. If plans offer lower cost sharing for biologics, beneficiaries with high-cost conditions may be more likely to enroll in those plans. If that’s true, plans may be reluctant to offer FOBs at lower cost-sharing tiers (Medpac)


Leave a comment

LTC Pharmacy Will Not be Charged with Fraud for Dispensing Off-Label Antipsychotics Prescriptions

Long-term care pharmacy Omnicare will not face charges that it engaged in “nationwide” Medicare fraud for off-label antipsychotics prescriptions, a federal judge recently ruled. However, the pharmacy still faces more limited False Claims Act charges over billing for antipsychotic drugs allegedly used for dementia care.

Read the article here

Leave a comment

CMS Issues Final Medical Loss Ratio Rule

The final medical loss ratio (MLR) regulations require Medicare Advantage and Part D Plan Sponsors to spend at least 85 percent of Medicare contract revenue on clinical services, prescription drugs, quality improvement activities, and direct benefits to beneficiaries in the form of reduced Part B premiums. Plan Sponsors who fail to meet the 85 percent threshold must remit payment to CMS for the product of: (1) the total revenue under the contract for the contract year, and (2) the difference between 0.85 and the contract’s MLR.

Full article here