Breaking down the 505(b)(2) drug price paradox.

Abstract

e23168 Background: Expected to bring biosimilar-like savings for small-molecule drugs, 505(b)(2) drugs (drugs with the same active ingredient, but differing in dosage form, strength, formulation, administration route, or indication) have been introduced for several legacy reference drugs. Despite being designated non-substitutable, many experts argue that 505(b)(2) drugs are similar to biosimilars for biological drugs, challenging their classification as single-source drugs. Methods: Using publicly available quarterly Medicare Average Sale Price data from 2020 to 2024, we identified distinct HCPCS codes and evaluated Medicare reimbursement (MCR) trends for 9 reference drugs and their 21 corresponding 505(b)(2) options in oncology. Results: During the evaluation period, 10 pre-existing 505(b)(2) drugs received distinct HCPCS codes, and 11 new 505(b)(2) drugs were approved and assigned distinct HCPCS codes. 13 of 21 505(b)(2) drugs (at the time of HCPCS assignment or initial pricing) had an initial MCR above the reference agent. In the evaluation period, 19 of 21 505(b)(2) drugs had an MCR above the reference agent during at least one quarter, with 15 having a MCR 2x or higher. All but one 505(b)(2) drug were for reference drugs with generic alternatives (multi-source drugs). Conclusions: The price variations for 505(b)(2) drugs show that this pathway for drug development does not portend cost savings, unlike biosimilars. Although there may be some clinical and operational benefit to the various formulations, the savings from 505(b)(2) drugs remains elusive especially when generics are available. Further refinement of this route of drug development should be explored. The utilization and financial implications (on patient responsibility, value-based care, etc.) of 505(b)(2) drugs with higher MCR also warrant further evaluation. Reference drugs, 505(b)(2) options and MCR. Reference Drug 505(b)(2) Options Price compared to reference at time of initial pricing Maximum Price in the evaluation period (% of reference) Generic Available Bendamustine (Treanda) (J9033) Bendeka (J9034) 85% 459% Y Belrapzo (J9036) 81% 543% (Apotex) (J9058) 290% 540% (Baxter) (J9059) 195% 540% (NOS) (J9056) 271% 987% Bortezomib (Velcade) (J9041) (Fresenius Kabi) (J9044/J9048) 78% 61% Y (Dr.Reddy’s) (J9046) 122% 1602% (Hospira) (J9049) 79% 135% Cyclophosphamide (Cytoxan) (J9070/J9075) (Auromedic) (J9071) 251% 358% Y (Ingenus) (J9073) 107% 107% Decitabine (Dacogen) (J0894) (Sun Pharma) (J0893) 124% 185% Y Fosaprepitant (Emend) (J1453) (Teva) (J1456) 223% 1560% Y Fulvestrant (Faslodex) (J9395) (Fresenius Kabi) (9394) 62% 706% Y (Teva) (J9393) 122% 224% Gemcitabine (Gemzar) (J9201) Gemcitabine (Accord) (J9196) 116% 305% Y Infugem (J9198) 1637% 2207% Paclitaxel, Protein Bound (Abraxane) (J9264) (American Regent) (J9259) 110% 116% Pemetrexed (Alimta) (J9305) (Sandoz) (J9297) 53% 71% Y Pemfexy (J9304) 159% 2055% (Teva) (J9314) 78% 251% (Hospira) (J9294) 61% 241%