Benefit Design And Biosimilar Coverage In Medicare Part D: Evidence And Implications From Recent Reforms.

Abstract

There is substantial disparity between Medicare Part D and employer-sponsored health insurance plans in the coverage of biosimilars and their reference biologics. These disparities may be due to design elements of Part D plans that encourage the adoption of more expensive biologic drugs. We undertook several analyses to illustrate the dynamics of benefit design incentives over time, compare formulary coverage in Part D plans with that of employer-sponsored plans, and study how the Bipartisan Budget Act of 2018 affected Part D formulary coverage. Using these analyses of Part D reforms enacted through the Bipartisan Budget Act, we discuss the implications of elements of the Inflation Reduction Act of 2022 that will be implemented in 2025. Biosimilar coverage increased by 23 percentage points five quarters after the Bipartisan Budget Act was implemented. We predict that the Inflation Reduction Act will also have a positive effect on biosimilar coverage. Given ample evidence of a relationship between drug coverage and utilization, our results suggest that Medicare patients and the federal government could realize substantial savings if Part D formularies resembled those of employer-sponsored plans.