Wednesday, November 22, 2017

The 2017 Biosimilar Rule Revision

This is a sidebar article.  For our main blog, see


CMS policy for biosimilar pricing had a major revision on November 2, 2017.

For the last several years, CMS had a policy to classify all biosimilars for a particular product under one code, and pay them at the quarter average sales price of the several biosimilars.   Since we don't have many or any categories with multiple biosimilars, this event hadn't really occured yet.

However, in big win for the biosimilar industry, CMS will begin categorizing each new biosimilar under its own HCPCS code from now forward (page 53348ff).
  • Under "bucket" coding for biosimilars, CMS would likely have had lower prices, due to drug-on-drug competition to create a profit margin for physicians, by one-upping each other to give the physician more margin under the CMS payment price for the quarter.  
    • For example, if a category pays $2000 for the biosimilar drug, each biosimilar would be incented to price for the physician at $1900, then $1800, then $1700, in a race to the bottom driven by competition to raise the physician's margin.
  • However, a sufficiently adverse marketplace would mean biosimilars would stand down and not enter the US marketplace at all, a genuine concern.   See RAPS, October 30, here.
  • CMS acknowledges that its change to biosimilar-specific coding will "address concerns about a stronger marketplace...encourage innovation to bring more products in the market."
    • Note that while CMS sets payment policies only for itself, it also controls all HCPCS codes.  So long as CMS staff had refused to even create unique HCPCS codes, any efforts to get a better market in other payer venues was a non-starter. 
  • Two other notes:
    • It's unusual that a change this large could be accomplished without a regulatory change.  The requisite regulation, 42 CFR 414.904(j), said that all biosimilars coded together would get an average price.  414.904(j) did not say whether CMS must, or must not, issue codes that group more than 1 biosimilar together.   CMS says, basically, it was discretionary within the regulation to lump biosimilars in one HCPCS code, and it will be discretionary now to give each biosimilar its own code.  
    • It's unusual in that the proposed policy change was quite short and the final policy change and discussion was very long.  CMS revealed intentions and rationales in the final policy that couldn't be guessed from the July proposal.
      • CMS used long term economic incentive thinking and found on balance it needed to encourage market entry and innovation.  One might think of the legal economic analyses championed by Judge Richard Posner in many articles and books (here).
    • See July proposal, November final, and Regulation bundled together by me into one PDF here.
These rules help with pricing.  In the actual market, products will try to differentiate themselves with delivery devices, apps, or other methods.   See the ENBREL special delivery device from Amgen, here.   See Amgen's special NEULASTA delivery timer pod device, here, the ONPRO injector.   The more biosimilars enter for a particular product, the more likely there is to be injector or other differentiation methods in competition to create improvements for physicians and patients.

Monday, November 20, 2017

A MAC Statement of Work

Solicitation documents and elaborate statements of work for CMS MAC's are available online, because these are publicly solicited government bids.

The website for the Jurisdiction J MAC is here, at Federal Biz

I've extracted the Solicitation here and the SOW here and archived them in the cloud.

Many readers of this blog are familiar with the Palmetto MOLDX program.  It doesn't seem to have a public SOW.   I tried to FOIA it; Palmetto GBA declined to release its SOW through FOIA, and CMS has acknowledged my request but may move in glacial time, if ever.

Friday, November 17, 2017

Nerdy Deep Dive on MSK IMPACT Approval Categories

This is a side bar to the main article, found here.

De Novo Classification

The MSK IMPACT test was approved through a 510(k) De Novo pathway, which is familiar enough.  Classification letter here.

Regulatory Category 866.6080?

The letter classifies IMPACT as Regulatory Category 21 CFR 866.6080. 

Oddly enough, this category appears to be absent at eCFR, which I think of as the categorical reference for Code of Federal Regulations.   (Here, and look for 866.6080: the official CFR stops at 866.6060.)

However, the FDA's own website has a webpage for 866.6080, here.   It says the regulation was created on April 1, 2017.   This was a Saturday, a day when the Federal Register isn't published.  FDA just lists the name of the category, not further detail.

So 21 CFR 866.6080 appears to be a sort of phantom regulatory category --  found on the FDA's "CFR" page but not on the federal CFR page, despite having a claimed creation date of April 2017, plenty of time for the two sites to sync up.

Product Category PQM versus PQZ

Oncomine Target Dx is classed as Product Class PQP, "NGS Oncology Panel, somatic or germline variant detection system."   PQP is always a PMA submission.   See FDA webpage here.    Manufacturers using Class PQM include Illumina, Foundation, Thermo Fisher; see here.

Product Category PQZ has its own webpage also, here.   This is for  "Next generation sequencing based tumor profiling test."   It's classed as 510(k) based on 21 CFR 866.6080.  It is eligible for "Third Party Review," specifically, by the New York State Department of Health.

A PowerPoint that walks through all this with screen shots is here.

Thursday, November 16, 2017

Agenda for Frontiers Health Conference, Berlin, November 2017