Biosimilars: Market disruptors, cost deflators or both?
As pharmacy costs continue to increase exponentially, biosimilars have the potential to make a big impact on employer spend.
While only 2% of the U.S. population uses specialty drugs, they account for more than 60% of an employer’s total drug spend.1 The good news is that biosimilars are regarded as a much-needed cost deflator for specialty medications and for pharmacy spend in general.2
The U.S. Food and Drug Administration (FDA) approved the first biosimilar in 2015, and since then, biosimilars have saved the health care system nearly $24B.2
Currently, there are more than 50 FDA-approved biosimilars.3 In addition to the cost savings they promise, the adoption of these drugs can likely be attributed to the fact that biosimilars have an efficacy comparable to the original specialty drugs they’re modeled after, leading to similar health outcomes.
These projected savings come as welcome news, as 9 in 10 surveyed employers expressed concern about the future of high-cost drugs.4 In fact, 43% of employers already cover or are planning to cover biosimilars, and exclude their reference products when the biosimilars are approved by the FDA.5
What are biosimilars, and how do they work?
While biosimilars have been available for years — and currently treat several serious chronic conditions — confusion and misconceptions about the different types of drugs continue to abound.
To understand how biosimilars can offer similar outcomes to the drugs they are modeled after, it’s important to clarify the differences and similarities between how various types of drugs are developed:
Innovator (or reference): The first drug with its specific active ingredient(s) to receive FDA approval for use and obtain the original patent for its unique composition.
Biologic: A type of complex drug that is biologically engineered from living components. They’re often more expensive because of the costs associated with patent protection and the extensive research and development that goes into creating them. Examples include branded drugs like Remicade®, a medication that treats inflammatory conditions.
Biosimilar: A drug that is clinically similar in composition and health outcomes to its FDA-approved biologic or innovator counterpart. Medical benefit biosimilars — which are generally administered by the provider rather than the patient — cost an average of 50% less than innovators,2 partly due to the lower cost of research and development. Manufacturers market biosimilars under either branded names (e.g., Avsola®) or chemical names (infliximab).
Generic: Generic drugs are synthetic, chemically engineered copies of an innovator drug. These are not branded drugs and are typically known by their chemical names. Because generics are exact chemical copies of innovators (which means research and development costs are minimal), these drugs are often priced significantly lower than innovator drugs. Generics are not available for biologics.
Taking a thoughtful approach to the adoption of biosimilars
The biosimilars that are currently available treat conditions such as cancer, inflammatory diseases and diabetes.6
1.2M
patients projected to have access to biosimilars by 20259
“In the coming years, we expect to see many biosimilars enter the market, as they are waiting in the wings for the patents to expire on their reference or innovator products,” says Susan Maddux, chief pharmacy officer for UnitedHealthcare Employer & Individual.
The U.S. biosimilars market has grown an average of 12.5% annually over the last several years.7 As the list of conditions that biosimilars address expands, more employees will be able to get the medications they need at a more affordable price. That matters to employers, since specialty medications can account for half of an employer’s total health care spend.8
Take Humira, a blockbuster drug prescribed to millions of people living with serious inflammatory diseases that generates billions of dollars in annual sales.10 With a list price of nearly $7,000 per month, Humira may be cost-prohibitive for many employees.11 But with several biosimilar equivalents now in the market, competition is helping to drive down the price of these expensive treatments and make them more accessible.
~53%
average drug savings for UnitedHealthcare clients on their medical benefit when biosimilars are available12
Because clinical health outcomes are similar between biosimilars and their biologic innovators, drug costs can significantly influence treatment decision-making.
“At UnitedHealthcare, our philosophy is to select the most clinically appropriate therapies that provide the lowest net cost to our members, whether that includes coverage for biosimilars, the innovator drug or a combination of the two,” Maddux says.
Understanding the role biosimilars have in the future of health care and on the cost of care, UnitedHealthcare has added biosimilars for Humira, in addition to offering Humira itself, to its standard Prescription Drug Lists (PDLs) while it continues to monitor market dynamics and advocate for more accessible drug prices.
“Our objective at UnitedHealthcare is to ensure that manufacturers are incentivized to continue to discover and develop new medicines that treat complex diseases,” adds Maddux. “The idea is that, by supporting competition, we can help lower net costs for employers as well as out-of-pocket costs for employees.”
4 tips to help employers maximize savings
With the growing popularity of biosimilars and the potentially significant cost savings they present, it’s important for employers to make the most of this opportunity to lower costs for their employees and for their bottom line.
While carriers decide which biosimilars to cover and providers decide which drugs are most appropriate for patients, employers can take certain steps to help get more value from biosimilars — for themselves and their employees:
- Work with insurance carriers and pharmacy benefit managers (PBMs) to understand their position on biosimilars, including which medications they cover and opportunities for potential savings
- Invest in health plan designs that include biosimilars in their medical and pharmacy offerings, with strategies that incorporate these drugs into employees’ existing treatment plans
- Map out a communication plan to educate employees on the differences between biosimilars, name brands and generics — and the impact of each drug type on costs and outcomes
- Offer employees incentives to switch from a reference drug to the biosimilar drug when available
