Biotech Values

[DewDiligence]

This is presumably why MNTA is down sharply today:

http://pharmalot.com/a-proposal-for-biosimilar-reimbursement-sparks-outrage/

A coterie of drug makers is upset with the Centers for Medicare & Medicaid Services over a proposal they fear would undermine the nascent biosimilar market in the United States. And over the past several weeks, the companies have enlisted the help of more than 70 lawmakers – Republicans and Democrats from both the House and Senate – to convince the federal agency to change its bureaucratic mind. The focus of all this activity is a code that governs how physicians would be reimbursed after they purchase and administer biosimilars…

…By adopting a single [reimbursement] code for all biosimilar versions of each brand-name biologic, [the complainants] argue CMS will rob drugmakers of incentives to pursue further development. If that happens, drugmakers and their allies warn the reverberations would be widely felt, since biosimilars are forecast to save an estimated $44 billion in US health care costs over the next decade.

For instance, different drug makers may charge different prices for biosimilar versions of a brand-name biologic. Different pricing may reflect different development costs. Physicians, however, purchase these types of treatments from drug makers, so they are more likely to be sensitive to pricing. [True for Medicare Part B, but not for Medicare Part D.]

Yet under the CMS proposal, physicians would be reimbursed at the same rate by CMS. So physicians who can choose between competing biosimilars may opt for the lower-priced treatment. Drug makers argue that such a scenario would create a race to the bottom [i.e. an all-out price war]…

This is not a new idea; however, when CMS initially broached this method of FoB reimbursement, biotech stocks were in a strong bull market, so nobody paid much attention to the potentially negative consequences.

The good news: There's a pretty good chance CMS will yield to the political pressure and not adopt the above reimbursement scheme for Medicare-Part-B FoBs.