Biosimilar Substitution May Reduce Financial Risk to Providers in Value-Based Payment Models

Providers participating in the Centers for Medicare & Medicaid Services’ (CMS’) value-based payment (VBP) models may realize a reduction in financial risk via biosimilar substitution.

By modeling the quantitative methodology of CMS’ Oncology Care Model (OCM), researchers estimated that the cost-savings from substitution of 6 biosimilars for their innovator products was $1200 per episode. Jingyan Yang, DrPH, MHS, Adjunct Assistant Professor, Political Science, Columbia University, New York, NY, and colleagues presented their findings in an abstract at the 2022 American Society of Clinical Oncology Annual Meeting.

According to the researchers, “oncology biosimilars may play an important role in managing risk for providers participating in VBP models. The impact of biosimilar substitution on risk to providers remains unclear, as prior researchers have adopted a generic budget impact approach.”

To address the impact of biosimilar substitution on financial risk, Dr Yang and colleagues examined biosimilars for the following 6 oncology agents: bevacizumab (Avastin), rituximab (Rituxan), trastuzumab (Herceptin), epoetin alfa, filgrastim (Neupogen), and pegfilgrastim (Neulasta). Risk was defined as total cost of care relative to target price for an episode per the OCM methodology. The study population consisted of 1620 episodes framed per the OCM methodology using the most recently available data from the Medicare Limited Data Set (2019-2020) that had use of a biosimilar.

For the analysis, substitution for antineoplastics was assumed to occur only in treatment-naïve patients and substitution for supportive therapies was assumed to occur for all eligible patients. Target prices were estimated using the 2020 (most recently available) OCM risk adjustment coefficients. The change in OCM risk bands associated with biosimilar substitution in >10,000 simulation runs was computed.

They determined that substituting biosimilars for their innovator drugs reduced cost relative to target by a mean of $1200 per eligible episode and the proportion of practices that were above benchmark for eligible episodes was reduced by 33%. The number of practices below target for eligible episodes was reduced by 42% due to biosimilar substitution.

However, these numbers are based on the assumption that substitution of chemotherapy drugs only occurred in patients who were treatment-naïve. When the model was changed to remove this assumption, cost-savings relative to target increased to $2700 per eligible episode.

“Biosimilar substitution significantly reduces aggregate provider risk in OCM, representing a significant potential intervention for providers to mitigate risk in oncology VBPs both in terms of absolute costs saved relative to target and reduction in risk band relative to payer projections,” the researchers concluded.

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