VALUE OF BIOSIMILARS
Biologics treat numerous diseases and comprise several of the 10 top selling drugs in 2018. They are also many of the most expensive drugs in use. Incorporation of biosimilars, and particularly interchangeable biosimilars, can expand access and lower costs of these effective treatments and make a meaningful impact on patient care.1,2
There is a particular interest in affordable treatment options for patients with chronic diseases who may receive treatment indefinitely2
Biosimilars can potentially reduce costs for consumers by creating price competition for products that previously faced few market competitors.
Figure 1 illustrates the relationships between manufacturers, providers, insurers, pharmacy benefit managers, and patients that drive both competition and potential savings. Based on models that take these relationships into consideration, the RAND (Research and Development) Corporation reported estimates that biosimilars will lead to a reduction of $53 billion in direct spending on biologic drugs from 2017 to 2026, or about 3% of the total estimated biologic spending over the same period, with a range of $24 to $150 billion3
Although traditional generics are 80% to 90% cheaper than the brand-name product, biosimilars are expected to be only 20% to 25% cheaper, given the complexity of developing these compounds3
The Centers for Medicare & Medicaid Services announced that each biosimilar approved will have its own reimbursement or Healthcare Common Procedure Coding System (HCPCS) code as part of Medicare Part B, effective January 1, 2018.4 Previously, all biosimilars for the same reference product used a common HCPCS code. The impact of this change on costs is unclear, and should be evaluated in the future5
Who may benefit from lower prices of biosimilars?3,6
Insurers may benefit in the short term, and in the long term, can shift cost savings to patients as lower premiums
Providers, hospitals, and other facilities often purchase biologics to stock for administration in the inpatient and outpatient/office setting, and receive reimbursement following use; therefore, lower-priced biosimilars may require less financial output upfront
Patients may experience a reduction in total out-of-pocket costs, including coinsurance, deductibles, and copayments
Taxpayers may benefit with lower spending in the Medicare and Medicaid systems
Employers may only see a minimal savings in healthcare expenditures based on several factors, including the number of employees using biologics, the healthcare benefit design, and the biosimilar versus reference product price points6
Extrapolation may improve access to biosimilars and contribute to the fulfilment of unmet patient needs.7,8
States will oversee the regulations for biosimilar dispensing, similar to that of brand and generic drugs (see Figure 2).9 Although there are no biosimilars designated as interchangeable to date, much of the legislation seeks to address related issues, including9:
Prescriber decisions to dispense reference products
Prescriber notification of substitution
Patient notification of substitution
Cost and pricing differential explanation between the reference product and the interchangeable biosimilar
Uptake of biosimilars in the United States
With the potential for more FDA approvals of biosimilars, the question of how to encourage uptake of biosimilars by prescribers and patients arises. Unlike most other countries with government-funded healthcare that can control for or reward the increased use of biosimilars, the United States has the challenge of incentivizing physicians, patients, and payers.
Uptake may be facilitated by providing education on biosimilars, placing biosimilars on lower formulary tiers, and encouraging payers to incentivize switching to biosimilars by employing price discounts.10 With changes in how treatment is provided and paid for in the United States, acceptance and use of biosimilars must be monitored to assess and overcome barriers to uptake.
Paavola A. 10 top-selling drugs of 2018. Becker’s Hospital Review website. https://www.beckershospitalreview.com/pharmacy/10-top-selling-drugs-of-2018.html. March 13, 2019. Accessed April 12, 2019.
The next frontier for improved access to medicines: biosimilars and interchangeable biologic products. The Biosimilars Council website. https://biosimilarscouncil.org/wp-content/uploads/2017/03/Biosimilars-Handbook.pdf. Accessed February 16, 2018.
Mulcahy AW, Hlávka JP, Case SP. Biosimilar cost savings in the United States. RAND Corporation website. https://www.rand.org/content/dam/rand/pubs/perspectives/PE200/PE264/RAND_PE264.pdf. Accessed February 16, 2018.
Can biosimilar drugs lower Medicare Part B drug spending? The PEW Charitable Trusts website. http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/01/can-biosimilar-drugs-lower-medicare-part-b-drug-spending?utm_campaign=LM+-+GP+-+SDRI+-+Biosimilars+Medicare+-+12+28+16&utm_medium=email&utm_. January 3, 2017. Accessed February 16, 2018.
Oskouei S. CMS biosimilar reimbursement shift: what you need to know. The Center for Biosimilars website. http://www.centerforbiosimilars.com/contributor/sonia-oskouei/2017/10/cms-biosimilar-reimbursement-shift-what-you-need-to-know. November 16, 2017. Accessed February 16, 2018.
Kopenski FR, Holcomb K. Understanding biosimilars and projecting the cost savings to employers: update. Milliman website. http://www.milliman.com/uploadedFiles/insight/2015/understanding-biosimilars.pdf. June 29, 2015. Accessed February 16, 2018.
Tesser JRP, Furst DE, Jacobs R. Biosimilars and the extrapolation of indications for inflammatory conditions. Biologics. 2017;11:5-11.
Olech E. Biosimilars: rationale and current regulatory landscape. Semin Arthritis Rheum. 2016;45:S1-S10.
State laws and legislation related to biologic medications and substitution of biosimilars. National Conference of State Legislatures website. http://www.ncsl.org/research/health/state-laws-and-legislation-related-to-biologic-medications-and-substitution-of-biosimilars.aspx. October 22, 2018. Accessed April 12, 2019.
Felix AE, Gupta A, Cohen JP, Riggs K. Barriers to market uptake of biosimilars in the US. GaBI J. 2014;3:108-115.