The Inflation Reduction Act (IRA), P.L. 117-169, which became law on August 16th, included some of the most consequential prescription drug pricing reforms ever passed by Congress. This week marked a pivotal milestone in the Department of Health and Human Services’ (HHS) implementation of the IRA, with changes to Medicare reimbursement for biosimilars going into effect as of October 1, 2022. On October 3rd, HHS and the Centers for Medicare & Medicaid Services (CMS) announced the implementation of the temporary increase in biosimilar add-on payments under Medicare Part B. Qualifying biosimilars will be paid the average sales price (ASP) plus 8 percent of the reference product’s ASP (rather than plus 6 percent) for a five-year period. For existing qualifying biosimilars as of September 30, 2022, the five-year period begins October 1, 2022. For new qualifying biosimilars, the five-year period begins on the first day of the calendar quarter during which payment is first made using ASP.
While the biosimilar payment changes announced this week constitute one of the first IRA health care reforms to go into effect, they will not be the last. In marking the implementation of these biosimilar payment reforms, Secretary Xavier Becerra stated that HHS is “moving full-speed ahead on Inflation Reduction Act implementation.” Notably, the law provides approximately $3.5 billion to HHS to implement its health care provisions, and the use of these funds is likely to be closely watched as part of the overall implementation by the Department.
While HHS recently released materials intended to provide a beneficiary-focused audience an overview of the IRA, significant stakeholder uncertainty remains regarding how and when HHS will implement these various reforms. It is reasonable to expect that the Department will provide further details regarding how the agency intends to approach implementation of the IRA given the breadth of these provisions and related resources. That said, the law does outline effective dates for various provisions. The implementation timeline chart below provides insight into when specific reforms will go into effect as well as when to anticipate that HHS may provide additional details regarding various provisions as corresponding effective dates draw near.
Stakeholders should continue to watch for additional announcements from HHS regarding the implementation of the IRA as each of the above dates draws near.
