Medicare Generics and Biosimilars Reform

Full Title:
Ensuring Access to Lower-Cost Medicines for Seniors Act

Summary#

This bill changes rules for Medicare Part D plans and Medicare Advantage drug plans (MA-PD). It requires plans that use a drug list (a formulary) to include lower-cost generic drugs and at least one lower-cost biosimilar when those products cost less than the branded reference product. It also requires specific lower-cost tiers for those generics and biosimilars and limits how plans can restrict access to them. The goal is to increase access to lower-cost medicines for people on Medicare.

  • Plans must include each generic Part D drug whose wholesale acquisition cost (WAC) is lower than its reference (brand) drug, starting for plan years on or after January 1, 2028.
  • If a reference biological product has one or more biosimilars with lower WAC, the plan must include at least one such biosimilar.
  • Plans must not impose prior authorization, step therapy, or other limits on these generics/biosimilars that are more restrictive than limits on the reference brand product.
  • Plans must create at least one cost-sharing tier that contains only generics and biosimilars and set copays (or equivalent coinsurance amounts) on that tier at least $20 lower than the plan’s lowest branded-drug tier.
  • For high-cost specialty drugs, plans must create a specialty tier for generics/biosimilars with coinsurance at least 5 percentage points lower than other specialty tiers.
  • The Secretary (CMS) must issue uniform rules for determining WAC, timing of determinations, and how plans implement formulary changes.

What it means for you#

  • Medicare Part D enrollees and MA-PD enrollees: You could see more generics and biosimilars available on your plan’s drug list. Those products must be placed on lower-cost tiers and have lower copays or coinsurance than branded alternatives, which could lower your out-of-pocket costs for those medicines.
  • People who hit a deductible: The rules apply after any deductible is satisfied. The government will not approve plan designs that put a deductible only on generics/biosimilars unless the same deductible applies to all drugs on the formulary (with limited exceptions).
  • Patients needing specialty drugs: If a high-cost generic or biosimilar is available, it must be on a separate specialty generic/biosimilar tier with lower coinsurance than the plan’s other specialty tiers. This could reduce out-of-pocket costs for some high-cost generics/biosimilars.
  • Plan sponsors (PDPs and MA-PD organizations): Plans must change formularies to add required generics/biosimilars, create the specified lower-cost tiers, and ensure utilization rules are no more restrictive for those products than for the branded reference. Plans must follow CMS’s timeline (including quarterly in-year checks) to identify and add eligible products.
  • Pharmacies and drug manufacturers: Formularies and tier placement rules will affect which products are dispensed and how they are priced to patients. Manufacturers of brand drugs may lose some formulary preference if lower-cost alternatives are added and given favorable tiering.

Expenses#

No publicly available information.

  • The bill text does not include a fiscal estimate or cost note.
  • This could mean plans and CMS would face administrative costs to update formularies, systems, and enrollment materials and to perform quarterly determinations.
  • It could affect plan finances through changes in drug utilization, rebates, and negotiated prices. Those effects are not estimated in the bill text.
  • There may be downstream effects on premiums, manufacturer revenues, and pharmacy reimbursement, but the bill does not provide numbers.

Proponents' View#

  • The bill appears intended to increase access to lower-cost medicines by forcing plans to list generics and biosimilars that have lower wholesale prices than brand drugs.
  • Supporters may argue this could lower out-of-pocket costs for people on Medicare by placing cheaper alternatives on lower-cost tiers and reducing restrictive barriers like prior authorization.
  • The tiering rules aim to make the financial advantage of using generics/biosimilars clear to patients (for example, a copay at least $20 lower).
  • Requiring timely in-year updates (quarterly) could speed the addition of lower-cost options when they become available.

Opponents' View#

  • One concern is that the bill limits plans’ flexibility to design formularies and use utilization management tools to control overall drug spending. Plans often use tiering and prior authorization to manage costs and to negotiate rebates; the bill narrows those tools.
  • The bill does not include a cost estimate, so it is unclear how added access and tiering requirements would affect Medicare program spending, plan premiums, or drug manufacturers’ pricing strategies.
  • The bill relies on wholesale acquisition cost (WAC) to decide inclusion. It directs the Secretary to set rules when WAC is missing or purchase prices differ, but it is unclear how often that will be needed and how those judgments will be made.
  • There may be administrative and IT costs for plans and CMS to make quarterly determinations and implement formulary changes; the bill does not specify who bears these costs or how large they will be.