Department of Health and Human Services 
Office of Inspector General 
Biosimilars Have Lowered 
Costs for Medicare Part B and 
Enrollees, but Opportunities 
for Substantial Spending 
Reductions Still Exist 
Ann Maxwell  
Deputy Inspector General 
 for Evaluation and Inspections 
September 2023, OEI-05-22-00140  U.S. Department of Health and Human Services 
 
Office of Inspector General 
Report In Brief 
September 2023, OEI-05-22-00140 
Why OIG Did This Review  Biosimilars Have Lowered Costs for 
Biologic drugs (biologics)usually 
Medicare Part B and Enrollees, but 
large, complex molecules produced 
in a living systemare some of the  Opportunities for Substantial Spending 
most expensive drugs available.  
They are estimated to cost  Reductions Still Exist 
Medicare Part B and its enrollees 
upwards of $32 billion annually.  What OIG Found 
Key Takeaway  Biosimilar competition has led to 
A biosimilar is a biologic that is 
Biosimilar competition has  decreases in costs for both 
highly similar to and has no 
already led to lower costs for  biosimilars and their reference 
clinically meaningful difference 
the Medicare Part B program  products.  However, many 
from an existing Food and Drug 
and enrollees.  However,  biosimilars remain more affordable 
Administration-approved biologic 
opportunities exist to further  than their reference products and 
(i.e., the biosimilars reference 
product), and biosimilars are often  reduce Part B and enrollee  could be more widely used.  We 
less expensive.    spending through increased  estimated that with increased use 
use of more affordable  of these more affordable 
This study identifies opportunities  biosimilars or with the  biosimilars instead of reference 
to reduce spending for Part B and 
implementation of different  products, Part B and enrollee 
its enrollees by increasing use of 
payment policies.  spending could have been reduced 
lower-cost biosimilars, which aligns 
in 2021.  Specifically, Part B and 
with OIG and Department of Health 
enrollee spending on these 
and Human Services goals.  It 
biologics could have decreased by $179 million, or 4 percent, if more 
provides insights into the impact of 
affordable biosimilars had been used as frequently as the most-used 
biosimilar market entry on Part B 
biosimilars.   
costs and how biosimilar use in 
Part B has developed under existing 
A different approach to Part B payment policies for biologics could have 
payment policies.  It also estimates 
resulted in even greater spending reductions.  One type of alternative 
potential spending reductions that 
payment policy that could help address the high costs of biologics for 
could be achieved through greater 
Part B and its enrollees is an LCA policyunder which payment would be 
use of biosimilars or under a least 
based on the lowest-cost drug, regardless of which one was 
costly alternative (LCA) payment 
administered.  We estimated that an LCA policy for biosimilars and their 
policy.  
reference products would have reduced Part B  
How OIG Did This Review  and enrollee spending on these biologics by $419 million 
We analyzed quarterly biosimilar  or 9 percentin 2021, even without an increase in the use of more 
and reference product prices; use;  affordable biosimilars.  
and program and enrollee costs in 
What OIG Recommends 
Medicare Part B from 2015 to 2021. 
We used this information to  To reduce Part B and enrollee spending on biologics, we recommend 
calculate estimates of how Part B  that the Centers for Medicare & Medicaid Services (CMS) pursue one or 
and enrollee spending could have  more payment changes that could further realize savings from biosimilars 
changed if biosimilars that were  for Part B and enrollees, which could include seeking additional 
more affordable than their  legislative authority.  CMS did not explicitly concur or nonconcur with our 
reference products had been used  recommendation, but stated that it is committed to taking action, as 
more frequently, or if biosimilars  appropriate, within its authority.  
and their reference products had 
b een paid using an LCA policy.   
TABLE OF CONTENTS 
 
 
BACKGROUND ................................................................................................................................................ 1 
Methodology in Brief ............................................................................................................................................................... 4 
Standards ..................................................................................................................................................................................... 4 
FINDINGS ......................................................................................................................................................... 5 
Biosimilar competition has led to lower costs for the Part B program and enrollees .................................... 5 
Use of biosimilars in Medicare Part B has grown significantly, and opportunities remain for even 
greater use ................................................................................................................................................................................... 7 
Greater use of more affordable biosimilars could have reduced Part B and enrollees spending ............. 8 
A least costly alternative payment policy could have resulted in even greater spending reductions...... 9 
CONCLUSION AND RECOMMENDATION .............................................................................................. 11 
Pursue one or more payment changes that could further realize savings from biosimilars for Part B 
and enrollees ............................................................................................................................................................................ 12 
AGENCY COMMENTS AND OIG RESPONSE ......................................................................................... 13 
DETAILED METHODOLOGY ....................................................................................................................... 14 
Data Sources ............................................................................................................................................................................. 14 
Data Analysis............................................................................................................................................................................. 14 
APPENDICES.................................................................................................................................................. 17 
Appendix A: Biosimilars and Reference Products Covered Under Part B in 2021. ......................................... 17 
Appendix B: Agency Comments ........................................................................................................................................ 18 
ACKNOWLEDGMENTS AND CONTACT ................................................................................................. 21 
ABOUT THE OFFICE OF INSPECTOR GENERAL .................................................................................... 22 
ENDNOTES ................................................................................................................................................... 23 
 
   
BACKGROUND 
OBJECTIVES 
1.  To identify trends in biosimilar and reference product average sales prices (ASPs); 
use; and program and enrollee costs in the Medicare Part B program for 
2015-2021. 
2.  To estimate how increased use of biosimilars could have changed Part B and 
enrollee spending in 2021.  
3.  To examine the extent to which applying a least costly alternative (LCA) payment 
policy could have changed Part B and enrollee spending in 2021. 
 
Biologic drugs (hereinafter referred to as biologics) are usually large, complex 
molecules produced in a living system, such as a microorganism, plant cell, or animal 
celland they are among the most costly prescription drugs for Medicare and its 
enrollees.  Biologics treat cancers; autoimmune diseases such as ulcerative colitis; 
anemia due to chronic kidney disease; and neutropenia, in which the body makes too 
few white blood cells as a result of chemotherapy.  Because biologics are infusions or 
injections commonly administered by a provider in a physicians office or hospital 
outpatient department, they are most often paid for by Medicare under Part B.1, 2, 3, 4  
Biologics cost Medicare Part B upwards of $32 billion annuallyand accounted for 
more than 80 percent of all Part B drug spending in 2020.5  In that same year, seven 
biologics each had Part B spending over $1 billion.6 
Biosimilars are biologics that are highly similar to and have no clinically meaningful 
differences from an existing biologic (known as a reference product)and they are 
often less expensive.7, 8  In 2010, Congress created an abbreviated approval pathway 
for biosimilars to increase competition and lower biologic prices.9  However, OIG has 
previously found that biosimilars were not always included on Medicare Part D plan 
formularies and were used far less frequently than their reference products.10  Further, 
in Medicare Part B, the lack of financial incentives for providers to use more 
affordable biosimilars may have limited their adoption.11  Several changes to 
biosimilar payment have already been made, and additional changes have been 
proposed, to further encourage biosimilar use and reduce Part B and enrollee 
spending on biologics.12 
 
 
 
   
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Background | 1   
Biosimilar Availability and Barriers to Greater Use 
Although the Food and Drug Administration (FDA) had 
Biosimilar and 
approved 33 biosimilars as of December 2021 (the end 
Reference Product 
of the period reviewed for this evaluation), only 21 were 
available in the United States.13  Ongoing patent  Drug Groups in this 
study 
litigation and patent dispute settlements prevented 
many of the remaining biosimilars from launching in the 
   Bevacizumab 
U.S. market.14  For example, as a result of patent dispute 
settlements, manufacturers of multiple FDA-approved     Epoetin Alfa 
biosimilars for the reference product Humira delayed 
   Filgrastim 
launch of their products in the United States until 
2023despite FDA approving the first Humira     Infliximab 
biosimilar in 2016.15  To address these ongoing patent 
   Pegfilgrastim 
delays, in 2021, the Secretary of the Department of 
Health and Human Services (the Department) directed     Rituximab 
FDA to work with the Federal Trade Commission and 
   Trastuzumab 
the U.S. Patent and Trademark Office to develop 
solutions to ensure that manufacturers cannot unfairly 
use the patent system to discourage competition.16   
The 21 biosimilars that were available in 2021 were approved as alternatives to 7 
reference products in Part B.  Throughout this report, we refer to available biosimilars 
and their reference product, collectively, as a drug group.  See Appendix A for a list 
of all biosimilars covered under Part B in 2021 and their reference products. 
A number of barriers have potentially contributed to limited use of the FDA-approved 
biosimilars that are already available in the United States.  Research indicates that low 
biosimilar use, particularly in Part B, may be attributed to the lack of financial 
incentives for providers to use more affordable biosimilars.17  Furthermore, research 
shows that many prescribers and patients are not well informed aboutand 
sometimes not even aware ofbiosimilar alternatives.18, 19  Some prescribers are 
hesitant to switch patients already successfully using a reference product to its 
biosimilar, even when they have a high degree of confidence in the biosimilars safety 
and effectiveness.20 
Part B Payment for Biologics 
Under Part B, providers purchase outpatient prescription drugs and biologics (Part B 
drugs) and then submit claims to Medicare for payment after administering those 
drugs to patients.  Payment for most Part B drugs is based on ASPwhich reflects the 
average price manufacturers charged to physicians, hospitals, and other purchasers
plus an add-on payment.21  Individual providers expenditures to purchase these 
drugs vary and may be higher or lower than that average price.  The Medicare 
program pays providers 80 percent of the total payment amount, while enrollees 
typically pay the remaining 20 percent of this amount as coinsurance.22  
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Background | 2   
 
HCPCS codes.  Providers submit claims for Part B outpatient prescription drugs using 
the drugs Healthcare Common Procedure Code System (HCPCS) code.23  Each HCPCS 
code is based on the drug name and the amount of the drug (e.g., in milliliters or 
milligrams) that represents one billing unit. 
Each reference product and biosimilar has its own HCPCS code.24  For example, a 
reference product with three biosimilars would result in four unique HCPCS codes.  In 
contrast, brand and generic versions of small molecule drugs (e.g., antibiotics and 
pain medications) are grouped under the same HCPCS code.25 
ASP.  To determine the ASP for each HCPCS code, the Centers for Medicare & 
Medicaid Services (CMS) uses manufacturer-reported information about prices 
charged to providers.  Manufacturers must report average quarterly pricing and sales 
volume data to CMS, minus any price concessions such as volume discounts and 
rebates.26, 27  CMS then calculates ASP based on the volume-weighted average price 
of each drugs HCPCS code.28, 29  The actual prices manufacturers charge to providers 
can vary, meaning that a providers cost to purchase a drug may be more or less than 
the drugs ASP. 
ASP payment.  
ASP reflects the prices manufacturers charge for drugs 
Provider payment for 
and ASP payments represent the cost of drugs to 
Part B drugs includes 
Medicare Part B.  
the ASP of the drug as 
well as an add-on  First, CMS uses manufacturer-submitted 
pricing information to calculate the ASP 
payment.  For our study 
for each HCPCS code. 
timeframe (2015-2021), 
Medicare paid  Then, providers receive an ASP payment 
based on the drugs ASP plus an add-on 
reference product 
amount. 
claims using the 
reference products ASP 
plus a 6-percent add-on, as it does for most Part B drugs.30, 31  In contrast, to 
encourage biosimilar use, Medicare paid biosimilar claims the biosimilars ASP plus an 
add-on equal to 6 percent of its reference products ASP.32  Because reference 
products often have a higher ASP than their biosimilars, this policy ensures that 
providers receive the same add-on payment whether they administer a biosimilar or 
its reference product, removing what might otherwise be a disincentive to prescribe a 
less expensive biosimilar.33  However, the Department noted that the single add-on 
policy has not provided sufficient incentive for providers to change prescribing 
patterns and maximize savings.34   
Providers receive the ASP-based payment regardless of the actual amount they paid 
to purchase the drug.35  As a result, providers choosing among clinically comparable 
options may be incentivized to use the drug that has the largest difference between 
their actual purchase price and the ASP-based Medicare payment amount, rather than 
to use the lowest-priced drug.  To address this concern, stakeholders have proposed 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Background | 3   
eliminating separate payment calculations for reference products and their 
biosimilars.36 
Methodology in Brief 
This study analyzed trends in biosimilar and reference product prices and use rates in 
the fee-for-service Medicare Part B program from 2015 to 2021.  Additionally, we 
calculated estimates to explore how Part B and enrollee spending in CY 2021 could 
have changed with (1) increased use of more affordable biosimilars; and (2) an LCA 
payment policy, which both the Department and OIG have recommended for 
Congressional consideration.  Our review included only biosimilars and reference 
products that were available on the U.S. market and covered by Part B in our analysis 
period; we did not assess why other FDA-approved biosimilars were not available on 
the U.S. market.   
Limitations 
Changes in Part B spending and enrollee spending are estimates.  They do not 
represent the exact changes in Part B or enrollee spending that would have resulted 
from increased biosimilar use or an LCA policy in 2021.  For example, the estimates do 
not account for how increases in biosimilar use could have affected ASPs for 
biosimilars and reference products.  This study also does not assess whether the 
increased use rates used to estimate spending reductions were achievable.  
Furthermore, this report does not include a dynamic analysis of how changes in 
payment policy could impact manufacturer prices or provider incentives.  Finally, this 
report does not include an analysis of additional factorssuch as prescriber 
preferencethat impact the extent of biosimilar use.  The study does not account for 
the effects of sequestration on Medicare payment amounts or estimated changes in 
Medicare spending.37, 38   
Standards 
We conducted this study in accordance with the Quality Standards for Inspection and 
Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Background | 4   
FINDINGS 
Biosimilar competition has already led to decreases in costs for the Part B program 
and enrollees, but opportunities exist to leverage biosimilars to further reduce 
spending.  After the introduction of biosimilar alternatives, both reference product 
and biosimilar prices fell, reducing overall costs for Part B and enrollees.  However, 
many biosimilars remained more affordable than their reference products and could 
be more widely used.  Had those more affordable biosimilars been used as frequently 
as the most-used biosimilars, Part B and enrollee spending on these biologics could 
have been reduced by $179 million in 2021.  Applying an LCA payment policy would 
have reduced Part B and enrollee spending by $419 million in 2021, even without an 
increase in the use of more affordable biosimilars. 
Biosimilar competition has led to lower costs for the Part B 
program and enrollees 
From 2015 to 2021, the availability of biosimilar competitors for biologic reference 
products led to price decreases for both types of drugs, which has reduced overall 
costs for the Part B program and enrollees.  When they were first introduced, nearly 
all biosimilars had a lower price, as measured by ASP, than their reference products.  
In most cases, both biosimilar and reference product prices fell after the first 
biosimilar alternative became available, reversing the trend of reference product price 
increases up to that point.  Only the filgrastim reference product did not follow this 
pattern; its price remained fairly constant over time, even as prices for its biosimilars 
decreased.  Because Part B payment for drugs is based on ASP, these price decreases 
lowered program and enrollee costs for both biosimilars and reference products. 
While biosimilar prices generally remained lower, for some drug groups reference 
product price decreases were substantial enough that the reference products cost less 
than some of their biosimilars at the end of 2021.  See Exhibit 1 on the next page for 
an illustration of the changes in biosimilar and reference product prices after the 
introduction of biosimilar competitors.   
Without these reductions in reference product prices after the introduction of 
biosimilar competitors, the Part B program and enrollees could have spent much 
more.  For example, if the price for the pegfilgrastim reference product had remained 
stable at its 2018 Q3 leveljust as the first biosimilar was introducedthe Part B 
program and enrollees would have spent an additional $264 million on this drug in 
2021.  
 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Findings | 5   
Exhibit 1: The prices for both biosimilars and reference products fell once 
biosimilar alternatives were introduced.  
 
Notes: We analyzed biosimilar prices starting in the first quarter with a published biosimilar ASP payment.  Because 
CMS calculates quarterly ASP using manufacturer price and volume information from two quarters prior, the first 
published ASP payment reflects the initial prices manufacturers charged for biosimilars. 
When necessary, we adjusted ASP to reflect a standardized quantity for the drug group.  See standardizing quantity 
administered and ASP in the detailed methodology for more information. 
The dotted line for infliximab reflects that prior to 2018, two infliximab biosimilars shared an ASP payment. 
Source: OIG analysis of CMSs ASP Drug Pricing Files from 2015-2021. 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Findings | 6   
Use of biosimilars in Medicare Part B has grown significantly, 
and opportunities remain for even greater use 
The overall use rate of available biosimilars in the Part B program grew from just 18 
percent in 2015 to 62 percent in 2021.  Biosimilars for filgrastimwhich include the 
first approved biosimilar, Zarxiowere the most widely adopted, accounting for 82 
percent of all filgrastim administered in the fourth quarter of 2021.39  However, other 
biosimilars were used less than 70 percent of the time, including two that were used 
less than half of the time. 
Exhibit 2: The range of biosimilar use rates in the fourth quarter of 2021 
highlights opportunities for increased biosimilar use. 
 
Source: OIG analysis of Part B claims from 2021. 
Some, but not all, biosimilars may be on track to reach use rates similar to those of 
filgrastim.  Within a year of its first biosimilar becoming available, filgrastim biosimilar 
use reached 37 percent.  Biosimilars for most other reference products had similar, 
although slightly lower, use rates after a similar amount of time on the market, and 
their use continued to grow.  In contrast, two biosimilars (pegfilgrastim and infliximab) 
with use rates of less than 16 percent a year after their introduction still had much 
lower use rates than other biosimilars at the end of 2021.  See Exhibit 3 on the next 
page for an illustration of biosimilar use rates over time. 
 
 
 
 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Findings | 7   
Exhibit 3: Many biosimilars appear on track to reach use rates similar to the most 
widely used biosimilars, but rates for the two least-used biosimilars have grown 
more slowly, despite their being on the market longer than most other biosimilars. 
 
Note: We analyzed the share of biosimilars administered starting in the quarter in which a biosimilar alternative first became 
available on the U.S. market. 
Source: OIG analysis of Part B claims from 2015-2021. 
Both prescriber preferences and market dynamics likely affect the extent to which 
different biosimilars have been adopted.  For example, the slower adoption rates for 
biosimilar infliximabs seen above may be the result of prescribers hesitancy to switch 
patients to a biosimilar for the chronic conditions these biologics treat.40  For 
pegfilgrastim biosimilars, slower adoption could be related to the substantial 
reductions in the reference products cost after biosimilars entered the market.  As 
noted above, the pegfilgrastim reference product was more affordable than all of its 
biosimilars by the end of 2021.  
Greater use of more affordable biosimilars could have reduced 
Part B and enrollees spending 
In recent years, the Department has noted the importance of biosimilars for reducing 
drug costs and has directed the Center for Medicare and Medicaid Innovation (CMMI) 
to continue investigating options to improve biosimilar adoption.41, 42 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Findings | 8   
We estimated that with greater use of 
more affordable biosimilars, Part B and  Part B spending could 
enrollee spending could have been  have been reduced by 
notably reduced in 2021.  Specifically, if  $179 million with 
the five biosimilars that cost less than  greater use of more 
their reference products for all or part of  affordable biosimilars. 
2021epoetin alfa, infliximab, 
bevacizumab, rituximab, and trastuzumabhad been used at the same rate as the 
most widely used biosimilar, filgrastim, spending by Part B and its enrollees could 
have been reduced by $179 million.  This amounts to 4 percent of the $4.4 billion that 
Part B spent on these biosimilars and their 
reference products in 2021.  Enrollees  An enrollees yearly 
portion of this spending reduction would  spending on rituximab 
have been $36 million.  This is an estimate  could have been 
of the scale of spending reductions that  reduced by $1,219 by 
could result from policies designed to  using a biosimilar. 
increase use of biosimilars in Part B when 
 
they are more affordable.  Such policies include a provision of the Inflation Reduction 
Act (IRA) that, starting in October 2022, required a 2-percentage-point increase to 
providers add-on payment for biosimilars with ASP less than that for their reference 
products for a five-year period.43 
The largest spending reductions would have come from increased use of rituximab 
biosimilars, which cost about one-quarter less than their reference product.  For 
enrollees, the typical yearly supply of rituximab cost $4,267 for the reference product, 
but $3,048 for the biosimilar.  By using a biosimilar, an enrollees spending could have 
been reduced by $1,219.44 
A least costly alternative payment policy could have resulted in 
even greater spending reductions 
OIG has previously recommended that CMS consider seeking legislative authority to 
implement LCA policies for certain clinically comparable Part B drugs.45  The 
Department has also noted that Congress could consider the use of an LCA policy for 
biosimilars and their reference products in Medicare.46  Under an LCA policy, 
reimbursement for a given reference product and its biosimilars would be 106 percent 
of the ASP of the least costly of those biologics, regardless of which biologic a 
provider administered.  An LCA policy could reduce Part B and enrollee spending 
while more directly encouraging price competition among these biologics.47 
   
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Findings | 9   
We estimated that Part B and enrollee 
Part B spending  
spending on these biologics in 2021 
could have been 
could have been reduced by $419 million 
reduced by  
under an LCA policy.  This amounts to 9 
$419 million under 
percent of the $4.4 billion that Part B 
an LCA policy. 
spent on these biosimilars and their 
reference products in 2021.  Enrollees 
portion of this spending reduction would have been $84 million.  Lower-cost 
biosimilars would have driven most of the spending reductions, but in some cases a 
reference product would have been the least costly option.  For example, the 
reference products for both pegfilgrastim and epoetin alfa had the lowest cost in 
three out of four quarters. 
Policymakers would need to consider this potential spending reduction alongside 
concerns about an LCA policys broader effects.  Stakeholders raised concerns with a 
previous LCA policy for drugs to treat prostate cancer, contending that the policy 
pushed providers to make treatment decisions based on which drug was most 
affordable, rather than which drug they considered the most appropriate treatment 
for their patient.48  While biosimilars have no clinically meaningful differences from 
their reference products, research has shown that providers comfort and familiarity 
with biosimilars varies, particularly when it comes to switching patients successfully 
established on a reference product to its biosimilar.  Furthermore, while an LCA policy 
could immediately reduce spending, some stakeholders worry that this short-term 
price competition could disincentivize future biosimilar development.49   
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Findings | 10   
CONCLUSION AND RECOMMENDATION 
Lowering drug spending remains a top priority for the Department, particularly for 
biologics, which are among the most expensive drugs on the U.S. market.  Our 
findings demonstrate that there are opportunities for greater use of more affordable 
biosimilars in Medicare Part B, which could directly lead to spending reductions for 
the program and enrollees.   
Alternative payment approaches could even more substantially reduce Part B and 
enrollee spending and promote price competition.  For example, we estimated that an 
LCA policy could have reduced Part B and enrollee spending by $419 million in 2021.  
Under an LCA policy, payment for biosimilars and their reference products would be 
based on the lowest-cost drug, regardless of which one was administered.  Since 
2012, OIG has recommended that CMS consider seeking legislative authority to 
implement LCA policies for certain clinically comparable Part B drugs.50  While an LCA 
policy for biosimilars and reference products in Part B could reduce spending and 
promote competition, implementation of such a policy would need to account for 
potential access concerns and implications for future biosimilar development. 
OIG acknowledges that multiple agencies within and outside HHS are taking steps to 
lower drug spending.  For example, FDA is engaging with the Federal Trade 
Commission and the U.S. Patent and Trademark Office to prevent manufacturers from 
using strategies to delay the entry of biosimilar competition.  Additionally, OIG 
recognizes that CMS is actively working to implement IRA provisions to lower drug 
costs.  As of October 2022, CMS had already implemented the IRAs temporary 
increase in Part B add-on payments for more affordable biosimilars, which 
strengthens providers financial incentives to use biosimilars.  However, the 
Department also noted that stakeholders have suggested further actions to 
encourage biosimilar adoption.51  CMS stated that it regularly monitors biosimilar 
pricing and use trends in Part B to assess the impact of the IRA and the launches of 
additional biosimilar competitors.  CMS also noted that CMMIs recently completed 
Oncology Care Model led to higher rates of biosimilar use among participating 
providers, and that it plans to determine the extent to which its newly launched 
Enhancing Oncology Model similarly encourages biosimilar use by incentivizing 
providers to prescribe lower-cost oncology drugs.52, 53  CMS should also pursue 
additional opportunities it identifies to leverage biosimilars to lower drug spending 
for Medicare and its enrollees.   
 
 
 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Conclusion and Recommendation | 11   
We recommend that CMS:  
Pursue one or more payment changes that could further realize 
savings from biosimilars for Part B and enrollees 
As CMS monitors the evolving biosimilar landscape in the Part B program, it should 
pursue one or more payment changes for biosimilars and their reference products to 
reduce Part B and enrollee spending.  CMS should use what it learns from its regular 
monitoring of biosimilar pricing and use trends and evaluation of its oncology care 
models to determine the most appropriate payment changes to pursue.  For example, 
CMS could determine that additional CMMI models encouraging biosimilar use 
beyond oncology care are needed.  CMS could also determine that other approaches, 
such as seeking legislative authority to change payment policies, would be more 
conducive to realizing further savings from biosimilars for Part B and enrollees.  
Additional legislative authority could allow CMS to institute an LCA policyas 
modeled for biosimilars and reference products in this report, and consistent with 
OIGs longstanding recommendationor another method of eliminating separate 
payments for biosimilars and their reference products. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Conclusion and Recommendation | 12   
AGENCY COMMENTS AND OIG RESPONSE 
CMS did not explicitly concur or nonconcur with our recommendation for it to pursue 
one or more payment changes that could further realize savings from biosimilars for 
Part B and enrollees.  Instead, CMS stated that it is committed to taking action within 
its authority to increase access to and use of biosimilars, and that it is currently 
conducting research to determine how additional demonstration projects could be 
used to address this issue.  OIG supports this effort and looks forward to future 
updates from CMS on its progress. 
In its response, CMS also noted that Section 1847A of the Social Security Act 
establishes how Medicare pays for Part B drugs, and that CMSs payment policies for 
drugs must be consistent with the Act.  OIG recognizes that CMSs current legislative 
authority to change payment policy for Part B drugs is limited.  Nonetheless, if CMS 
determines that payment policy changes beyond its current authority are the most 
effective way to realize further savings from biosimilars for Part B and enrollees, OIG 
encourages CMS to seek additional legislative authority. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Agency Comments and OIG Response | 13   
DETAILED METHODOLOGY 
Data Sources 
Product information for biosimilars and reference products.  We used FDAs 
Biosimilar Product Information; FDAs Purple Book; manufacturer and industry press 
releases; and First Databank to identify all biosimilars and reference products available 
as of January 1, 2021, and their National Drug Codes (NDCs).54  FDAs Biosimilar 
Product Information lists all FDA-approved biosimilars, and the Purple Book lists all 
biologics, including biosimilars and their reference products.55, 56  Manufacturer and 
industry press releases include information about when FDA-approved biosimilars 
become available in the United States.  The First Databank database links drugs 
proprietary names with their NDCs.   
Biosimilars and reference products covered by Part B.  We used CMSs 
HCPCS/NDC crosswalks from 2015 to 2021 to identify the HCPCS for biosimilars and 
reference products that may be covered by Part B.  CMSs crosswalks link drugs NDCs 
with HCPCS codes used in Part B claims.57, 58  
Part B prescription drug data.  To determine biosimilar use and Part B and enrollee 
spending, we used National Claims History (NCH) records from CMSs physician office 
and hospital outpatient prospective payment system files.59  NCH records include the 
HCPCS code associated with each drug; the amount of the drug administered; and 
total Part B and enrollee payment for each Part B claim. 
Average sales price data.  We used publicly available ASP payment information from 
CMS to identify quarterly payment amounts for each biosimilar and reference product 
HCPCS code.   
Data Analysis 
Identifying biosimilars and reference products.  Using FDAs Biosimilar Product 
Information and Purple Book, we identified all biosimilars approved for use as of 
January 1, 2021, and their reference products.  We used First Databank to identify all 
NDCs associated with these biosimilars and reference products.  In total, we identified 
148 NDCs for 7 reference products and 21 biosimilars covered by Part B.  We then 
used CMSs quarterly HCPCS/NDC crosswalks from 2015-2021 to identify the unique 
HCPCS codes billed in the hospital outpatient and physician office settings for each 
biosimilar and reference product. 
Biosimilar drug group(s).  We considered all biosimilars approved for the same 
reference product to belong to one biosimilar drug group.  Biosimilar drug group(s) 
included multiple biosimilar HCPCS codes, with different manufacturers, proprietary 
names, and strengths.  We analyzed average costs for each biosimilar drug group to 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Detailed Methodology | 14   
avoid making assumptions about provider practices that are beyond the scope of this 
study (e.g., which biosimilar brand would be administered). 
Standardizing quantity administered and ASP.  In some instances, the biosimilars 
and reference product in one drug group had HCPCS codes based on different 
quantities (e.g., the reference products HCPCS code was for 6 mg while the 
biosimilars HCPCS codes were for 0.5 mg).  To account for these differences in our 
analysis, we adjusted the quantity administered and ASP to reflect a standardized 
quantity for each drug group. 
For example, to standardize the quantity administered if the reference products 
HCPCS code was for 6 mg and the biosimilars for 0.5 mg, we multiplied the reference 
products quantity by 12.  To standardize the price, we divided the reference products 
ASP by 12. 
Analysis of biologic prices over time.  To analyze trends for biosimilar and reference 
product prices over time, we used CMSs ASP payment data, published quarterly, for 
our analysis period.  To calculate price from ASP payments, we subtracted the add-on 
amount from the ASP payment. 
Analysis of biosimilar use over time.  To calculate Part B biosimilar use over time, 
we identified NCH records for biosimilar and reference product HCPCS codes from 
January 1, 2015, to December 31, 2021.60 
To calculate biosimilar use rates for each drug group (as seen on page 2 and in 
Appendix A), we first determined the total quantity administered for each biosimilar 
and reference product in our analysis.  For each drug group, we then divided the total 
quantity administered across all biosimilars by the total quantity administered for the 
entire drug group (including the reference product).  We performed this calculation 
for each quarter and each calendar year from 2015 to 2021. 
2021 spending.  We calculated Part B and enrollee spending for 2021 by quarter and 
summed each quarter to get total annual spending.   
To calculate Part B spending, we summed the amount for both physician office and 
hospital outpatient claims.  For physician office claims, we summed the line allowed 
charge amount variable.  For hospital outpatient claims, we summed the enrollee 
deductible, coinsurance, and Part B payment amounts.   
To estimate enrollee spending, we calculated 20 percent of the Part B spending 
amount, which represents the typical coinsurance in Medicare Part B.  
Average enrollee spending per typical administration.  To provide an example of 
potential spending reductions for enrollees, we chose to calculate the differences for 
one biologic, rituximab.  Rituximab biosimilars cost about one-quarter less than their 
reference product.  We used average enrollee spending and the typical yearly 
quantity administered for rituximab.  We first identified the average enrollee spending 
for the biosimilars and the reference product separately by dividing the total enrollee 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Detailed Methodology | 15   
spending by the total quantity administered.  Next, to identify the yearly quantity 
most typically administered, we used the median quantity administered for rituximab.  
Finally, we multiplied this average spending by the median yearly quantity 
administered.  
Spending reduction with greater biosimilar use.  We estimated potential spending 
reductions that Part B and enrollees could have realized if more affordable biosimilars 
had been used at the same use rate as the most widely used biosimilar group in 2021 
instead of their reference products.  First, using the previously calculated biosimilar 
use rates, we identified which biosimilar group had the highest use rate in each 
quarter; this was the filgrastim drug group for all four quarters in 2021.  Next, we 
calculated the needed change in quantity administered for the other drug groups to 
achieve this same highest use rate.  We subtracted the 2021 actual biosimilar quantity 
administered from what the quantity administered would have been at the highest 
use rate.   
We calculated the cost difference between biosimilars and their reference product.  
First, we calculated a single volume-weighted average cost for each biosimilar drug 
group.  Then we calculated the cost difference between this biosimilar average cost 
and the reference products cost. 
We calculated the total potential reduced cost had biosimilars been used at the 
highest use rate.  We multiplied the change in quantity by the cost difference.  To 
calculate reduced costs specific to enrollees, we calculated 20 percent of the total 
potential reduced cost. 
Spending reduction under an LCA policy.  We calculated an estimate for changes in 
Part B and enrollee spending if biosimilars and reference products had been paid 
under an LCA policy in 2021.   
To do so, we identified the least costly option in each drug group as the biologic 
(reference product or biosimilar) with the lowest price in each quarter and calculated 
the 6-percent add-on amount.   
To estimate the change in Part B and enrollee spending, we multiplied each drug 
groups total quarterly use by its calculated LCA payment amount.  We then 
calculated the difference between this and the actual 2021 quarterly spending for 
each drug group.  The total difference between actual spending and the estimated 
spending amounts represents the potential reductions in Part B and enrollee 
spending under an LCA policy.  To estimate changes in enrollee spending, we 
calculated 20 percent of the change in total spending.
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Detailed Methodology | 16   
APPENDICES 
Appendix A: Biosimilars and Reference Products Covered Under 
Part B in 2021 
Reference 
Drug Group  Biosimilar  FDA Approval Date 
Product(s) 
Filgrastim  Granix  August 201261  Neupogen 
  Zarxio  March 2015 
Nivestym  July 2018 
Bevacizumab  Mvasi  September 2017  Avastin 
  Zirabev  June 2019 
Trastuzumab  Ogivri  December 2017  Herceptin 
   Herzuma   December 2018   
Ontruzant  January 2019 
Trazimera  March 2019 
Kanjinti  June 2019 
 
Epoetin Alfa  Retacrit  May 2018  Epogen/Procrit 
Rituximab  Truxima  November 2018  Rituxan 
  Ruxience  July 2019 
  Riabni  December 2020 
Pegfilgrastim  Fulphila  June 2018  Neulasta 
  Udenyca  November 2018 
  Ziextenzo  November 2019 
  Nyvepria  June 2020 
Infliximab  Inflectra  April 2016  Remicade 
Renflexis  May 2017   
Avsola  December 2019 
Source: OIG research, 2023. 
 
 
 
 
 
 
 
 
   
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Appendix A | 17  Appendix B: Agency Comments 
Following this page are the official comments from CMS. 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Appendix B | 18  DATE:  September 14, 2023 
TO:  Ann Maxwell 
Deputy Inspector General for Evaluation and Inspections 
Office of Inspector General 
FROM:  Chiquita Brooks-LaSure 
Administrator 
Centers for Medicare & Medicaid Services 
SUBJECT:  Office of Inspector General (OIG) Draft Report: Biosimilars Have Lowered Costs 
for Medicare Part B and Enrollees, But Opportunities for Substantial Spending 
Reductions Still Exist OEI-05-22-00140 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the Office of Inspector Generals (OIG) draft report. CMS is committed to ensuring 
that Medicare beneficiaries have access to high quality and affordable health care, while at the 
same time working to preserve the Medicare Trust Funds. 
Recognizing that Medicare payment policy can play a role in promoting use of biosimilar and 
generic drugs, CMS is committed to continuing to use its authority to promote competition, 
support increased utilization of biosimilars and generic drugs when clinically appropriate, reduce 
the federal governments spending on drugs, encourage price transparency, and achieve greater 
equity in drug access and affordability for beneficiaries. 
CMS continues to monitor the evolving biosimilar landscape in the Medicare Part B program. 
Executive Order 14036 requires CMS to prepare for Medicare and Medicaid coverage of 
interchangeable biological products, and for payment models to support increased utilization of 
generic drugs and biosimilars, and CMS is committed to continuing to act within our statutory 
authority to achieve these goals.1 It is important to note that Section 1847A of the Social Security 
Act establishes how Medicare pays for drugs covered under the Part B benefit. It is also 
important to note that factors outside of coverage and payment policy may affect provider and 
beneficiary preferences for a reference product versus the biosimilars. For example, prescribers 
or beneficiaries may prefer the more familiar reference product when a biosimilar first enters the 
market. In addition, the price of a biosimilar may fall below the price of the reference product 
even when taking the reference products rebate into consideration, which may drive uptake and 
increased market share for the biosimilar. CMS will continue to research and pursue strategies 
within our statutory authority to address both cost and market competition concerns. 
1 Please see Executive Order 14036 (July 9, 2021) Promoting Competition in the American Economy, Section 
5(p)(viii). https://www.govinfo.gov/content/pkg/FR-2021-07-14/pdf/2021-15069.pdf 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140                           Appendix B | 19 In addition, as noted by OIG, the Inflation Reduction Act of 2022 (IRA) instituted various 
changes to the Part B program, including with respect to the allocation of financial responsibility 
for prescription drug costs between manufacturers, beneficiaries, and the Medicare program. As 
of October 2022, CMS had already implemented the IRAs temporary increase in Part B add-on 
payments for certain biosimilars. The temporary add-on payment may increase access to 
biosimilars, as well as encourage competition between biosimilars and reference biological 
products, which may, over time, lower drug costs and lead to savings for beneficiaries and 
Medicare. 
OIGs recommendation and CMS' response is below. 
OIG Recommendation 
CMS should pursue one or more payment changes that could further realize savings from 
biosimilars for Part B and enrollees. 
CMS Response 
Within our authority, CMS is committed to taking action, as appropriate, to increase access to 
and use of biosimilars. 
As discussed above, any changes that CMS might make to the payment policies for drugs and 
biologicals covered under Part B must be consistent with the requirements of Section 1847A of 
the Social Security Act. In addition, while a multitude of policy and operational considerations 
influence whether CMS implements a demonstration project, CMS is currently conducting the 
research necessary to determine how demonstration projects could be used to test ways to lower 
beneficiary and program spending on drugs and incentivize the use of biosimilar and generic 
drugs.2 CMS will continue to explore options to address this issue. 
CMS thanks OIG for their efforts on this issue and looks forward to working with OIG on this and 
other issues in the future. 
2 https://innovation.cms.gov/strategic-direction-whitepaper 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140                           Appendix B | 20 ACKNOWLEDGMENTS AND CONTACT 
Acknowledgments 
Sarah Vogel served as the team leader for this study, and Kayla Phelps served as the 
lead analyst.  Others in the Office of Evaluation and Inspections who conducted the 
study include Jonathan Carroll and Justin Mun.  Office of Evaluation and Inspections 
headquarters staff who provided support include Melissa Baker, Rob Gibbons, Althea 
Hosein, and Michael Novello.  
We would also like to acknowledge the contributions of other Office of Inspector 
General staff, including Eddie Baker and Amber Jessup.   
This report was prepared under the direction of Laura Kordish, Regional Inspector 
General for Evaluation and Inspections in the Chicago regional office; Adam Freeman, 
Deputy Regional Inspector General; and Hilary Slover, Assistant Regional Inspector 
General. 
Contact 
To obtain additional information concerning this report, contact the Office of Public 
Affairs at Public.Affairs@oig.hhs.gov.  OIG reports and other information can be found 
on the OIG website at oig.hhs.gov. 
Office of Inspector General 
U.S. Department of Health and Human Services 
330 Independence Avenue, SW 
Washington, DC 20201 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Acknowledgments and Contact | 21   
ABOUT THE OFFICE OF INSPECTOR GENERAL 
Office of Inspector General 
https://oig.hhs.gov 
The mission of the Office of Inspector General (OIG) is to provide objective oversight 
to promote the economy, efficiency, effectiveness, and integrity of the Department of 
Health and Human Services (HHS) programs, as well as the health and welfare of the 
people they serve.  Established by Public Law No. 95-452, as amended, OIG carries out 
its mission through audits, investigations, and evaluations conducted by the following 
operating components: 
The Office of Audit Services.  OAS provides auditing services for HHS, either 
by conducting audits with its own audit resources or by overseeing audit work done 
by others.  The audits examine the performance of HHS programs, funding recipients, 
and contractors in carrying out their respective responsibilities and provide 
independent assessments of HHS programs and operations to reduce waste, abuse, 
and mismanagement. 
The Office of Evaluation and Inspections.  OEIs national evaluations 
provide HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  To promote impact, OEI reports also provide practical 
recommendations for improving program operations. 
The Office of Investigations.  OIs criminal, civil, and administrative 
investigations of fraud and misconduct related to HHS programs and operations 
often lead to criminal convictions, administrative sanctions, and civil monetary 
penalties.  OIs nationwide network of investigators collaborates with the Department 
of Justice and other Federal, State, and local law enforcement authorities.  OI works 
with public health entities to minimize adverse patient impacts following enforcement 
operations.  OI also provides security and protection for the Secretary and other 
senior HHS officials. 
The Office of Counsel to the Inspector General.  OCIG provides legal 
advice to OIG on HHS programs and OIGs internal operations.  The law office also 
imposes exclusions and civil monetary penalties, monitors Corporate Integrity 
Agreements, and represents HHSs interests in False Claims Act cases.  In addition, 
OCIG publishes advisory opinions, compliance program guidance documents, fraud 
alerts, and other resources regarding compliance considerations, the anti-kickback 
statute, and other OIG enforcement authorities. 
 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  About OIG | 22   
ENDNOTES 
 
1 The Medicare Payment Advisory Commission (MedPAC), Chapter 14: The Medicare prescription drug program (Part D): 
Status report, Report to the Congress: Medicare Payment Policy, March 2018.  Accessed at https://www.medpac.gov/wp-
content/uploads/import_data/scrape_files/docs/default-source/reports/mar18_medpac_ch14_sec.pdf on April 15, 2023.  Part 
D covers drugs, including biosimilars, that can be administered at home by an enrollee or caregiver.  
2 Biosimilars reviewed in this study also include erythropoietin-stimulating agentsdrugs statutorily covered under Part B for 
dialysis patients even when self-administered.  Section 1861(s)(2)(O) of the Social Security Act (hereafter the Act). 
3 42 CFR  414.900(b). 
4 The Centers for Medicare & Medicaid Services (CMS), Chapter 15: Covered Medical and Other Health Services, Medicare 
Benefit Policy Manual, May 2022, p. 51.  Accessed at https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/downloads/bp102c15.pdf on April 15, 2023.   
5 OIG analysis of CMSs Part B Dashboard for calendar year (CY) 2020 spending.  Accessed at https://data.cms.gov/summary-
statistics-on-use-and-payments/medicare-medicaid-spending-by-drug/medicare-part-b-spending-by-drug on April 15, 2023. 
6 Ibid. 
7 A reference product is the single biological product, already approved by FDA, against which a proposed biosimilar product 
is compared.  42 U.S.C.  262(i)(4). 
8 Biosimilars can also be deemed as interchangeable by FDA if the manufacturer can also demonstrate that the biosimilar 
produces the same clinical result as the reference product in any given patient.  This designation primarily affects biosimilar 
use in the pharmacy setting, as in most States, pharmacists can substitute an interchangeable biosimilar for its reference 
product without involving the prescriber.  Only four biosimilars had been deemed interchangeable as of July 2023.  42 U.S.C.  
262(k)(4). 
9 The Biologics Price Competition and Innovation Act (BPCIA), part of the Patient Protection and Affordable Care Act, created 
an abbreviated approval pathway for biosimilars to introduce competition and lower prices for biologics.  Under the BPCIA, 
the FDA may approve a biosimilar once its manufacturer demonstrates that the biosimilar is highly similar to the reference 
product and that there are no clinically meaningful differences between the reference product and the biosimilar.  P.L. 111
148, Title VII,  7001-7003, and 42 U.S.C.  262(i). 
10 OIG, Medicare Part D and Beneficiaries Could Realize Significant Spending Reductions With Increased Biosimilar Use, OEI-05-
20-00480, March 2022.   
11 Assistant Secretary for Planning and Evaluation (ASPE), Medicare Part B Drugs: Trends in Spending and Utilization: 2006-
2017, November 2020, p. 17.  Accessed at https://aspe.hhs.gov/sites/default/files/private/pdf/264416/Part-B-Drugs-Trends-
Issue-Brief.pdf on April 15, 2023. 
12 HHS, Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in 
the American Economy, September 9, 2021.  Accessed at https://aspe.hhs.gov/reports/comprehensive-plan-addressing-high-
drug-prices on July 19, 2023. 
13 FDA, Biosimilar Product Information: FDA-Approved Biosimilar Products, December 2022.  Accessed at 
https://www.fda.gov/drugs/biosimilars/biosimilar-product-information on May 22, 2023. 
14 Mike Z. Zhai, Ameet Sarpatwari, and Aaron Kesselheim, Why Are Biosimilars Not Living up to Their Promise in the US?, 
AMA Journal of Ethics, August 2019, p. 670.  Accessed at https://journalofethics.ama-assn.org/article/why-are-biosimilars-not-
living-their-promise-us/2019-08 on April 15, 2023. 
15 Ibid., p. 671. 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Endnotes | 23   
 
16 HHS, Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in 
the American Economy, September 9, 2021, p. 10.  Accessed at https://aspe.hhs.gov/reports/comprehensive-plan-addressing-
high-drug-prices on July 19, 2023. 
17 ASPE, Medicare Part B Drugs: Trends in Spending and Utilization: 2006-2017, November 2020, p. 17.  Accessed at 
https://aspe.hhs.gov/sites/default/files/private/pdf/264416/Part-B-Drugs-Trends-Issue-Brief.pdf on April 15, 2023. 
18 John W. Cook, et al., Academic oncology clinicians understanding of biosimilars and information needed before 
prescribing, Therapeutic Advances in Medical Oncology, vol. 22, Jan. 6, 2019. 
19 Ira Jacobs, et al., Patient attitudes and understanding about biosimilars: an international cross-sectional survey, Patient 
Preference and Adherence, May 26, 2016. 
20 Before switching their patients to a biosimilar, these providers may want additional real-world evidence about patient 
switches or further guidance from FDA.  NORC, Understanding Stakeholder Perception of Biosimilars, April 2021.  Accessed at 
https://www.norc.org/content/dam/norc-org/pdfs/20210405_AV%20-%20NORC%20Biosimilars%20Final%20Report.pdf on 
June 15, 2023. 
21 Sections 1847A(b)-(c) of the Act. 
22 Medicare, Part B (Medical Insurance) Costs.  Accessed at https://www.medicare.gov/basics/costs/medicare-costs on April 6, 
2023.   
23 HCPCS is a standardized coding system that represents medical procedures, supplies, products, and services.  The codes 
facilitate the processing of health insurance claims by Medicare and other insurers. 
24 Prior to 2018, CMS assigned one HCPCS code to all biosimilars with the same reference biologic.  82 Fed. Reg. 52976-
53371, 53186 (November 15, 2017).   
25 ASPE, Medicare Part B Drugs: Trends in Spending and Utilization, 2006-2017, November 20, 2020, p. 5.  Accessed at 
https://aspe.hhs.gov/sites/default/files/private/pdf/264416/Part-B-Drugs-Trends-Issue-Brief.pdf on April 15, 2023.  
26 Sections 1847A(b)(6) and 1847A(c)(3) of the Act.  Drugs assigned to the same HCPCS code may have come in multiple 
strengths and volumes. 
27 Section 1927(b)(3) of the Act.  Section 1847A(f)(2) of the Act requires manufacturers without a Medicaid drug rebate 
agreement to report average sales price information to CMS for calendar quarters beginning on January 1, 2022.  See also 42 
CFR  414.804. 
28 There is a two-quarter lag between the sales quarter for which manufacturers submit pricing and sales volume information 
and the effective date of the ASP-based payment amount.  For example, CMS uses the first calendar-quarter pricing and sales 
volume information submitted by manufacturers to calculate ASP for the third calendar-quarter ASP payment amounts. 
29 Before sufficient data exist to calculate ASPsuch as during the first few quarters after a new biosimilar enters the 
marketCMS pays providers the drugs wholesale acquisition cost (WAC) plus 3 percent.  See MedPAC, Part B Drugs 
Payment Systems, November 2021.  Accessed at https://www.medpac.gov/wp-
content/uploads/2021/11/medpac_payment_basics_21_partb_final_sec.pdf on June 18, 2023.  
30 Typically, providers receive 106 percent of ASP (i.e., 100 percent of the ASP plus a 6-percent add-on) for most Part B drugs 
administered in a physicians office as well as for some high-cost drugssuch as reference productsadministered in 
hospital outpatient departments.  Drugs administered in a hospital outpatient department are considered separately payable 
when they exceed a threshold for per-drug, per-day costs (greater than $130 in CY 2021).  85 Fed. Reg. 85866-86305, 86032 
(December 29, 2020). 
31 From 2018 to 2022, payment was generally lower for Part B drugsincluding reference products and older biosimilars
administered at hospitals participating in the 340B Drug Pricing Program.  However, the Supreme Court recently ruled that 
the Federal government had improperly reduced payment rates for 340B hospitals in CY 2018 and CY 2019.  As a result, CMS 
will return to paying for all 340B drugs at the default rate for CY 2023 (generally ASP + 6 percent) and will develop a plan to 
compensate providers for the reduced payments from 2018-2022.  87 Fed. Reg. 71748-72310, 71973-71976 (November 23, 
2022).  See also STAT, Supreme Court sides with hospitals on Medicare drug pay dispute, June 15, 2022.  Accessed at 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Endnotes | 24   
 
https://www.statnews.com/2022/06/15/supreme-court-sides-with-hospitals-on-medicare-drug-pay-dispute/ on April 15, 
2023.   
32 As of October 2022, the add-on payment for qualifying biosimilars temporarily increased from 6 to 8 percent of the 
reference products ASP.  Biosimilars qualify for this increased add-on for a 5-year period if they have a lower ASP than their 
reference product.  Inflation Reduction Act, P.L. 117-169,  11403. 
33 According to The Pew Charitable Trusts, by paying the same add-on rate for reference products and their biosimilars, CMS 
offered providers equal financial incentives when providers are choosing between a reference product and its biosimilar.  The 
Pew Charitable Trusts, Can Biosimilar Drugs Lower Medicare Part B Spending?, January 2017.  Accessed at 
https://www.pewtrusts.org/-/media/assets/2017/01/leveraging-biosimilars-to-lower-medicare-part-b.pdf on April 15, 2023. 
34 HHS, Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in 
the American Economy, September 9, 2021, pp. 14-15.  Accessed at https://aspe.hhs.gov/reports/comprehensive-plan-
addressing-high-drug-prices on July 19, 2023. 
35 Due to the two-quarter lag between the sales quarter for which manufacturers submit pricing and sales volume information 
and the effective ASP payment amount, the payment providers receive in any given quarter is based on the manufacturers 
average prices from two quarters prior. 
36 The Department noted that Congress could consider a single payment limit applicable to the reference product and all 
biosimilar product(s) to encourage price competition and drive down ASPs.  See HHS, Comprehensive Plan for Addressing 
High Drug Prices: A Report in Response to the Executive Order on Competition in the American Economy, September 9, 2021, 
pp. 14-15.  Accessed at https://aspe.hhs.gov/reports/comprehensive-plan-addressing-high-drug-prices on July 19, 2023.  
MedPAC has proposed a similar idea.  See MedPAC, Addressing the high prices of drugs covered under Medicare Part B, 
April 13, 2023, p. 8.  Accessed at https://www.medpac.gov/wp-content/uploads/2022/07/Tab-B-Part-B-drugs-April-2023-
SEC.pdf on May 18, 2023.   
37 The sequestration implemented by the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012 reduces 
Medicare payments to providersbut not enrollee paymentsby 2 percent.  With this mandatory 2-percent reduction in the 
Federal payment, providers effectively receive a payment of ASP plus 4.3 percent.  CMS Medicare FFS Provider e-News, 
Mandatory Payment Reductions in the Medicare Fee-for-Service (FFS) ProgramSequestration, March 8, 2013.  Accessed 
at https://www.cms.gov/Outreach-and-Education/Outreach/FFSProvPartProg/Downloads/2013-03-08-standalone.pdf on 
April 15, 2023.   
38 Sequestration was suspended during part of our analysis period, from May 1, 2020, through December 31, 2021.  CMS, 
Medicare FFS Claims: 2% Payment Adjustment (Sequestration) Suspended Through December, April 16, 2021.  Accessed at 
https://www.cms.gov/outreach-and-educationoutreachffsprovpartprogprovider-partnership-email-archive/2021-04-16-
mlnc#_Toc69394754 on April 4, 2023.   
39 Lisa A. Raedler, Zarxio (Filgrastim-sndz): First Biosimilar Approved in the United States, Journal of Hematology Oncology 
Pharmacy, June 2020, vol. 10, no. 3.  Accessed at https://jhoponline.com/2016-first-annual-oncology-guide-to-new-fda-
approvals/16744-zarxio-filgrastim-sndz-first-biosimilar-approved-in-the-united-states on April 15, 2023. 
40 Some possible explanations for slower adoption of infliximab biosimilars include (1) that infliximab is used to treat chronic 
conditions (e.g., Crohns disease, ulcerative colitis, psoriasis) and prescribers may be hesitant to switch patients to a biosimilar 
when those patients are stable on the reference product, and (2) that certain practitioners who treat these chronic conditions 
may be less familiar with biosimilars (e.g., advanced practice providers treating inflammatory bowel disease (IBD)).  See Alice 
J. Chen, et al., Uptake of Infliximab Biosimilars Among the Medicare Population, JAMA Internal Medicine, July 20, 2020.  
Accessed at https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2768650 on April 14, 2023.  See also Nana 
Bernasko and Kofi Clarke, Why Is There Low Utilization of Biosimilars in Inflammatory Bowel Disease Patients by 
Gastroenterology Advanced Practice Providers?, Crohns & Colitis, vol. 3, no. 4, October 2021.  Accessed at 
https://academic.oup.com/crohnscolitis360/article/3/4/otab004/6196016 on April 14, 2023. 
41 CMMI has explored payment and service delivery models that feature (1) innovative payments that incentivize the use of 
biosimilars, (2) sharing savings from biosimilar use with providers, and (3) bundled payments for episodes of care that 
incentivize the use of biosimilars.  HHS, Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Endnotes | 25   
 
Executive Order on Competition in the American Economy, September 9, 2021, pp. 16-17.  Accessed at 
https://aspe.hhs.gov/reports/comprehensive-plan-addressing-high-drug-prices on July 19, 2023. 
42 HHS, A Report in Response to the Executive Order on Lowering Prescription Drug Costs for Americans, 2023, p. 10.  Accessed 
at https://innovation.cms.gov/data-and-reports/2023/eo-rx-drug-cost-response-report on February 2, 2023. 
43 Inflation Reduction Act, P.L. 117-169,  11403. 
44 These figures represent 20 percent of total Part B spending for the typical annual amount administered and serve as an 
estimation of enrollee spending.  Actual spending may be lesser or greater depending on enrollees deductibles and 
supplemental insurance.  For example, people with Medicare who have supplemental coverage may not be responsible for 
paying the full cost-sharing amount for outpatient prescription drugs.  However, in 2018, nearly one in five enrollees with 
traditional Medicare did not have supplemental coverage and would have been responsible for the full cost-sharing for their 
outpatient prescription drugs.  Kaiser Family Foundation, A Snapshot of Sources of Coverage Among Medicare Beneficiaries in 
2018.  Accessed at https://www.kff.org/medicare/issue-brief/a-snapshot-of-sources-of-coverage-among-medicare-
beneficiaries-in-2018/ on April 14, 2023. 
45 OIG, OIGs Top Unimplemented Recommendations: Solutions To Reduce Fraud, Waste, and Abuse in HHS Programs, 2022, 
p. 7.  Accessed at https://oig.hhs.gov/reports-and-publications/compendium/files/compendium2022.pdf on April 15, 2023. 
46 HHS, Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in 
the American Economy, September 9, 2021, pp. 14-15.  Accessed at https://aspe.hhs.gov/reports/comprehensive-plan-
addressing-high-drug-prices on July 19, 2023. 
47 Nitzan Arad, et al., Duke-Robert J. Margolis Center for Health Policy, Originator Biologics and Biosimilars: Payment Policy 
Solutions to Increase Price Competition While Maintaining Market Sustainability in Medicare Part B, October 2021, p. 7.  
Accessed at https://healthpolicy.duke.edu/publications/originator-biologics-and-biosimilars-payment-policy-solutions-
increase-
price#:~:text=Payment%20reforms%20are%20needed%20to%20increase%20price%20competition,rates%20and%20least%20
costly%20alternative%20%28LCA%29%20payment%20policies on April 14, 2023. 
48 Coalition urges CMS to drop LCA policy for prostate cancer drugs, Urology Times, November 16, 2006.  Accessed at 
https://www.urologytimes.com/view/coalition-urges-cms-drop-lca-policy-prostate-cancer-drugs on April 14, 2023. 
49 Nitzan Arad, et al., Duke-Robert J. Margolis Center for Health Policy, Originator Biologics and Biosimilars: Payment Policy 
Solutions to Increase Price Competition While Maintaining Market Sustainability in Medicare Part B, October 2021, p. 7.  
Accessed at https://healthpolicy.duke.edu/publications/originator-biologics-and-biosimilars-payment-policy-solutions-
increase-
price#:~:text=Payment%20reforms%20are%20needed%20to%20increase%20price%20competition,rates%20and%20least%20
costly%20alternative%20%28LCA%29%20payment%20policies on April 14, 2023. 
50 OIG, OIGs Top Unimplemented Recommendations: Solutions To Reduce Fraud, Waste, and Abuse in HHS Programs, 2022, 
p. 7.  Accessed at https://oig.hhs.gov/reports-and-publications/compendium/files/compendium2022.pdf on February 22, 
2023. 
51 HHS, A Report in Response to the Executive Order on Lowering Prescription Drug Costs for Americans, 2023, p. 17.  Accessed 
at https://innovation.cms.gov/data-and-reports/2023/eo-rx-drug-cost-response-report on February 2, 2023. 
52 Abt, Evaluation of the Oncology Care Model, p. 30.  Accessed at https://innovation.cms.gov/data-and-reports/2023/ocm-
evaluation-pp1-9 on July 20, 2023. 
53 CMS, Enhancing Oncology Model.  Accessed at https://innovation.cms.gov/innovation-models/enhancing-oncology-model 
on July 19, 2023. 
54 NDCs are numeric codes that uniquely identify a drug, its manufacturer, and its package size. 
55 FDA, Biosimilar Product Information: FDA-Approved Biosimilar Products.  Accessed at 
https://www.fda.gov/drugs/biosimilars/biosimilar-product-information on April 14, 2023. 
 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Endnotes | 26   
 
56 FDA, Purple Book: Lists of Licensed Biological Products with Reference Product Exclusivity and Biosimilarity or 
Interchangeability Evaluations.  Accessed at https://www.fda.gov/drugs/therapeutic-biologics-applications-bla/purple-book-
lists-licensed-biological-products-reference-product-exclusivity-and-biosimilarity-or on April 14, 2023. 
57 Our analysis did not include Not Otherwise Classified codes.  Providers may use these codes when billing for drugs and 
biologics in some instances, but they do not uniquely identify records for specific biosimilars and their reference products. 
58 This excludes claims for biologics used during the treatment of end-stage renal disease (ESRD).  ESRD is not paid on the 
basis of ASP, as of January 1, 2011, and is instead paid under a bundled rate.  CMS, Medicare Claims Processing Manual, 
August 6, 2021, p. 5.  Accessed at https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/clm104c08.pdf on March 7, 2023.   
59 We excluded claims not paid on the basis of ASPs.  This includes claims from critical access hospitals (CAHs); certain 
hospitals in Maryland; hospitals located outside one of the 50 States, the District of Columbia, and Puerto Rico; and hospitals 
of the Indian Health Service.  42 CFR  419.20(b).  Accessed at https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-
B/part-419/subpart-B/section-419.20 on March 7, 2023.  
60 We excluded from our analysis claims from hospitals that are not paid for Part B drugs on the basis of ASP.  These include 
CAHs; Maryland waiver hospitals; hospitals outside the 50 States, D.C., or Puerto Rico; and hospitals of the Indian Health 
Service.  42 CFR  419.20(b). 
61 Although Granix was approved under a Biologic License Application before the BPCIA created an abbreviated approval 
pathway for biosimilars, it is considered a filgrastim biosimilar alternative. 
Biosimilars Have Lowered Costs for Medicare Part B and Enrollees, 
but Opportunities for Substantial Spending Reductions Still Exist 
OEI-05-22-00140  Endnotes | 27