Biosimilars have not decreased out of pocket costs in US (yet)
April 16, 2024
Biologic drugs are manufactured under carefully controlled conditions by genetically engineered yeast or bacteria. These drugs are expensive to manufacture compared to drugs which can be chemically synthesized, and they differ in minute ways from batch to batch and manufacturer to manufacturer. Biologic drugs allow us to treat a host of diseases, especially diseases with inflammation, that previously had few available treatments. The Food and Drug Administration vigorously tests biosimilar drugs to be sure that they act just as the “brand name” biologic.
Biosimilar drugs, like generics for biologic drugs, have the promise to help dramatically lower costs and make biologic drugs available affordably to more patients. The US lags behind Europe in deploying biosimilars, and even though biosimilars have been available for many biologics, few have gotten a foothold.
Researchers in JAMA Health Forum reviewed the claims of over 190,000 people (1.7 million claims) from 2017 to 2021 and found that entry of a biosimilar lowered overall costs, but did not decrease what individuals paid out of pocket. This might be in part because there were at most three biosimilars, and previous research with small molecule (chemical) drugs showed that prices dropped substantially when more than three generics were marketed. They also noted that many of these medications were administered in settings where providers billed plans directly, and the patient did not pick the biosimilar up in a pharmacy. In many instances, providers “mark up” a physician-administered drug substantially. In some cases, patients had no cost sharing for physician-administered drugs in their plan design.
Another problem limiting out of pocket cost savings for biosimilars is that pharmacy benefit managers have often not placed biosimilar medications on their formularies or have priced them so that the brand name drug was more attractive.
Implications for employers:
Biosimilars will eventually have lower acquisition costs, and plan design should reward plan members for being treated with biosimilars.
Employers can query their pharmacy benefit managers and medical carriers about what they are doing to promote the adoption of biosimilars, and push against use of higher cost drugs that might offer additional margin for providers or PBMs.
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Illustration by Dall-E
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