Artificial intelligence (AI) continues to dominate debate within the healthcare industry not only about innovation and implementation, but also how to regulate it. As announced by the Centers for Medicare and Medicaid Services (CMS), on April 4, CMS completed the “Contracts 2026 Policy and Technical Changes for the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Planning Program, and Comprehensive Care Program for the Seniors.” Mainly the technical rules of Medicare Advantage and Part D programs, but there was a notable passage about what was not finalized (emphasis added):
We also do not intend to finalize the following provisions from the proposed rules: Enhanced health equity analysis: Annual health equity analysis of utilization management policies and procedures, application to Medicaid programs, and ensuring equitable access to Medicare Advantage Services – the Guardrail of Artificial Intelligence (AI). However, CMS wants to acknowledge the broader interest in AI regulation, and the possibility that it would be appropriate to engage in future rulemaking in this area will continue to be considered.
This is a big (correct) step. There are many questions left in it about all the hype surrounding the use of AI in healthcare. How is it actually used? It should be regulated, and if so, how? Doug Holtz Eakin, president of the American Action Forum, appropriately pointed out that finalizing the post-market closure rules on Friday appears to be a “best practice,” but CMS appears to have gotten something in soft-pedaling AI regulations. And, while it prompted some surprises among the industry, it was the right call.
According to consulting firm accents, AI application in clinical scenarios, including robot-assisted surgery, virtual nursing assistants and administrative workflow support could generate $150 billion in annual savings for the US health economy by 2026. Only 33% of payers, 17% of health systems, and 18% of health services/tech companies document positive ROIs. Although it has nothing to do with us who are not employed in these companies, we need to be aware of creating a regulatory structure for AI implementations as the ROI for this technology is unknown (as is the case with adoption), and we cannot fully understand or predict current and future use cases.
In general, people show a positive attitude when asked about the use of AI in healthcare. Approximately 59% of Americans believe that using AI improves health outcomes by supporting diagnosis and treatment. In the same survey, the majority of people (77%) felt that AI could work to effectively reduce healthcare disparities. There are also areas where AI-assisted healthcare has a positive impact on patient care and accessibility. For example, we'll take radiology. AI-powered diagnostic tools can analyze imaging scans faster with similar or similar accuracy as radiologists, leading to faster diagnosis. Mayo Clinic has teamed up with Google Health to discover that AI applications in radiation therapy planning can improve efficiency and accuracy and facilitate treatment initiation.
However, according to the American Medical Association, doctors are still limiting how they actually use AI. Example: 12% of doctors used AI to help diagnose patients. 20% used AI to help prepare discharge instructions, care plans, and progress notes. Use 10% for patient health recommendations and care engagement. These percentages will be better, but smarter AI models will be developed, but there will be longer runways to determine whether these use cases have the required regulations.
The potential benefits of AI in healthcare are compelling, but regulatory frameworks need to be carefully considered to ensure patient safety is not at risk and to prevent early restrictions. By not jumping reflexively to complete the proposed rules, the CMS can better navigate the provider's landscape and considerately ensure that rulemaking does not create implementation issues.
Chart Review: Billions of Savings by Dealing with Biosimilar Pipeline Voids
Nicholas Montenegro, Health Policy Intern
A recent IQVIA report shows that the biology/biosimilar industry produces large molecular medicines that are commonly used to treat complex chronic diseases such as cancer and autoimmune disorders, but is expected to increase significantly over the next decade. Since the Food and Drug Administration first issued guidance on biosimilars in 2014, 73 biosimilars have been approved. The predicted growth can be attributed to two main factors. (1) the need to address the increased prevalence of chronic diseases, and (2) the loss of exclusivity (LO) of many well-known biological patents. Over the next decade, 118 biological patents are expected to expire, offering $232 billion in opportunities for potential biosimilar competitors. The chart below shows the market share of these biology facing patent LOEs as part of the total forecast biological market size for 2025-2034. Biosimilars are projected to expand at an annual growth rate of approximately 17%, with total revenues exceeding $203.4 billion.
The Department of Health and Human Services is studying the success of biosimilars in improving access to critical drugs and reducing drug spending in the healthcare system. The introduction of biosimilars saved at least $36 billion in 2023 from 2015 (when the first biosimilar entered the market), and in 2023 alone, saving $4.4 billion for Medicare Part B. These IQVIA estimates show significant savings in the health sector, but biosimilars increase patient access and affordability through savings in wholesale costs for reference products, and saving 87% savings is not so simple. Of the 118 biology who have lost patent exclusivity over the next decade, approximately 90% currently have no biosimilar replacements in development. The reduction in biosimilar pipelines can be due to countless external and internal factors, including high investment costs, distorted concentrations of biology due to treatment classes, regulatory frameworks, inconsistencies in refunds, and uncertainties associated with invasion reduction laws. Policymakers may seek to strengthen their industry pipelines to ensure continued access to these critical drugs.
