An “unintended consequence” of the Affordable Care Act may mean that Medicare Part D beneficiaries will pay more for biosimilars than for costlier brand-name biologics, according to a new analysis released last week.
The reason is that the law requires drug makers to provide 50 percent discounts for brand-name biologics when beneficiaries reach the so-called donut hole, or coverage gap in which there is a temporary limit on what Medicare Part D will pay for drugs. However, the law does not require companies to provide discounts for biosimilars, which are lower-cost and nearly identical versions.
Using a hypothetical example in which a brand-name biologic costs $30,000 a year, a Part D beneficiary would pay more than $1,500 — or 39 percent more — for a biosimilar. Such higher expenses are likely to discourage use of biosimilars in the Part D program and, as a result, lower savings for Medicare overall, according to Avalere Health, a consulting firm that ran the analysis.