The impacts of Medicare biosimilar reimbursement policies.

25 Background: Biosimilars have the potential to reduce costs compared to their reference biologics (RB), yet adoption has been slow. The Inflation Reduction Act (IRA) introduced a new Medicare Reimbursement (MCR) policy for qualifying biosimilars—those with an Average Sales Price (ASP) below that of the RB’s ASP—setting payment at ASP + 8% of the RB’s ASP for five years starting in October 2022. This diverges from the traditional ASP+6% model based on the biosimilar’s own ASP and updates a 2018 Medicare (CMS) policy linking biosimilar MCR to 6% of the RB’s ASP. While intended to incentivize biosimilar adoption, the policies create a misalignment by tying biosimilar MCR to the RB’s pricing. This study evaluates the impacts of CMS and IRA policies on biosimilar pricing and market competition. Methods: We conducted a retrospective analysis of MCR and ASP data for nine RBs and 30 biosimilars from 2018–2025. We assessed changes in MCR and compared observed rates to expected rates without IRA and CMS policy changes. Results: MCR for RBs rose before biosimilar entry, then declined variably and modestly. Pegfilgrastim was an exception, with its MCR dropping sharply below that of most biosimilars. Biosimilar MCRs declined more steeply and varied widely. From 2018-2025, 376 of 512 (73.4%) biosimilar MCRs exceeded the ASP+6% of their ASP due to higher RB ASP. IRA further increased 194 of 265 (73.2%) biosimilar MCRs between Q4 2022-Q2 2025. When biosimilar ASP exceeded the RB ASP, 69 of 71 (97.2%) biosimilar MCRs were below ASP+6% of their ASP, with 53 of these 69 (76.8%) for pegfilgrastim biosimilars. Conclusions: CMS and IRA policies represent well-intentioned efforts to promote the adoption of biosimilars, fostering competition in the biologics market. However, their deviation from the traditional ASP+6% model raises concerns about market dynamics, sustainability, and scalability. The sharp decline in pegfilgrastim's MCR highlights the potential long-term pricing challenges associated with tailoring incentives to encourage cost-effective (lower cost) alternatives, irrespective of biosimilars or RBs. Addressing these misalignments may require policy refinements to balance competition, product selection, incentives and healthcare savings. Further research is needed to evaluate biosimilar prescribing trends, spending differentials, overall savings, non-Medicare payer policies, adoption barriers/facilitators, and market share shifts. Biologic # of Biosimilars % of Biosimilar MCRs > ASP+6% (2018–2025) % of Biosimilar MCRs > ASP+6% (IRA Period) Bevacizumab 4 98.3% 97.3% Rituximab 3 100% 100% Trastuzumab 5 100% 100% Infliximab 4 74.3% 82.4% Epoetin alfa 1 64.3% 54.5% Filgrastim 3 100% 100% Pegfilgrastim 6 6.1% 9.4% Ranibizumab 1 60% 60% Total 30 73.4% 72.3%