EFFECTS OF THE REMOVAL OF THE EXCLUSION OF BIOSIMILARS FROM MEDICARE’S COVERAGE GAP DISCOUNT PROGRAM

Abstract

Biosimilar competition provides an opportunity to dramatically reduce healthcare spending while simultaneously making life-saving drugs more accessible to patients. In 2018, Congress passed the Bipartisan Budget Act of 2018, which included a provision to remove the exclusion of biosimilars from Medicare Part D’s Coverage Gap Discount Program (CGDP), effectively eliminating one of the significant impediments to biosimilar adoption by Part D plans. This paper is the first to analyze the effects of this policy change on Part D plans’ coverage of reference biologics and biosimilars. Using CMS’s Medicare Part D plan, formulary, and cost files from 2016Q1-2021Q4 and historical pricing films from Micromedex RED BOOK, I analyze the effects of the policy change on various benefit designs from the percentage of plans covering the drug to utilization management tools like prior authorization and step therapy. I find that the policy change has a negative effect on reference biologic benefit design and a positive effect on biosimilar benefit design.