Study: Biosimilar Drugs Could Generate $38.4 Billion in Savings Over 5 Years

Biosimilar drugs could drive down prices of expensive medications used to treat illnesses, such as cancer and rheumatoid arthritis, with estimated savings of approximately $38.4 billion, or approximately 5.9% of projected total US spending on biologics, between 2021 and 2025, according to the results of a RAND Corporation study.

More aggressive biosimilar competition and uptake could cause larger cuts, with savings estimated at up to $124.5 billion between 2021 and 2025.

The study, results of which published were published in the American Journal of Managed Care, estimates that most of the expected savings would be caused by downward pressure on brand-name biologics, rather than lower biosimilar prices.

“Biosimilars have the potential to lower spending on biologic drugs that account for a rapidly increasing share of overall United States prescription drug spending,” Andrew Mulcahy, a senior policy researcher at RAND, said in a statement.

Biologics are complex drugs manufactured in living systems that include insulin, monoclonal antibodies to block inflammation in rheumatoid arthritis, and a range of drugs to treat cancer, multiple sclerosis, and other serious diseases.

Although biologics accounted for approximately 2% of US prescriptions by volume in 2017, they accounted for about 37% of net spending on prescription drugs.

Biosimilar drugs are comparable to already approved biologics in terms of efficacy, potency, and safety but are manufactured by different companies.

Biosimilars can be approved for marketing by the FDA after the manufacturer of the reference biologic has had several years of exclusivity and patent protection.

In the new study, investigators projected spending from 2021 to 2025 on 60 biologics under 3 scenarios after analyzing the US price and volume data for biologics already facing competition from biosimilars between 2014 to 2020.

The modeling included both biologics that already face biosimilar competition and those that could face it in the future. The already-marketed biosimilar savings were calculated relative to market prices and shares in the fourth quarter of 2020.

About two-thirds of savings from biosimilars were from those expected to be launched between 2021 and 2025. Investigators found that adalimumab, the biosimilar of Humira from AbbVie, was the greatest contributor at about $19.5 billion. The remaining one-third of savings was estimated from greater use and lower prices for already-marketed biosimilars.

The estimated savings in the study are smaller than 2 other recent assessments, also including a prior RAND assessment.

However, this newer analysis uses more recent data to make estimates and more comprehensively breaks down savings by biologic and source, according to RAND.

“Future research should focus on the likely impacts of specific policy proposals and assessing how the number of competitors, market size, and other factors drive the magnitude of savings,” Mulcahy said.

Achieving greater use of biosimilars across the entire US health care system may require coordinated new policies and managed care strategies, according to investigators

There are several policy changes that could increase biosimilar update, including paying the same rates for reference biologics and their biosimilars, keeping separate rates but paying a higher margin for biosimilars, or decreasing patient cost-sharing for biosimilars, investigators said.

Congress and other federal policymakers are considering several of these proposals, according to RAND.

Reference

Biosimilar drugs could generate $38.4 billion in savings over five years, study finds. RAND Corporations. News release. January 10, 2022. Accessed January 10, 2022. Email.