Biosimilars: Reviving the Conversation Amid Shifting Market Tides

The trajectory for biosimilars has seemingly changed. Given the recent uptick in biosimilar development and approvals, brand-name patents on the verge of expiration and health plans pushing harder than ever to incentivize utilization, employers may not have to wait much longer to realize the savings potential of these products.


October 28, 2021

In March of 2015, the first biosimilar drug was granted Food and Drug Administration (FDA) approval in the United States. Employers rejoiced at the prospect of what this could mean for drug spend going forward. Indeed, the estimated price differential for biosimilar drugs to their branded counterparts is approximately 15%-37%,1 a percent savings that is expected to grow as more biosimilars come to market, stimulating market competition and creating the potential for deeper discounts on some very high-cost specialty medications.

But this potential has yet to be realized, and initial excitement nearly died on the vine; instead of seeing a biosimilar marketplace roar to life, the industry saw a painstakingly slow trickle of products reach the market over the last 6 years, with many more currently stuck in the pipeline. To date, the FDA has approved a total of 29 biosimilars, spanning three therapeutic categories (oncology, oncology support and autoimmune). Only 20, however, have been launched on the market with the majority of these indicated for oncology or supportive oncology care. As such, approximately 90% of current biosimilar cost is flowing through the medical benefit.

Biosimilar 101

In simplest terms, a biosimilar can be viewed as a “generic” version of a brand-name biologic drug. However, contrary to what we see with generics, a biosimilar drug is not an exact chemical replica of its brand-name counterpart. In fact, biologics and biosimilars are not generated from chemical structures at all but rather are made within living systems (e.g., yeast, bacteria or animal cells). Given these natural sources of origin, the biosimilar drug’s structure ends up being highly similar to but not exactly the same as its biologic reference product (Figure 2). This may mean minor differences in clinically inactive drug components, but “no clinically meaningful differences” in terms of drug safety, purity and potency.2,3 Because analytical, animal and clinical studies are based on a comparison of the biosimilar to the reference product, the FDA is able to approve a biosimilar without requiring as many clinical trials as were dictated for the reference product. Essentially, the biosimilar sponsor is able to rely on the safety and efficacy work completed by the reference product’s sponsor and focus on a comparative assessment.4

The Molecular Structure of a Generic Drug Compared to a Biologic/Biosimilar 
Figure 1: The Molecular Structure of a Generic Drug Compared to a Biologic/Biosimilar5
Reference Biologic Product Compared to a Biosimilar Product 
Figure 2: Reference Biologic Product Compared to a Biosimilar Product6

However, over the next 2-3 years, the biosimilar market is poised for big changes:

  • Unprecedented success of recent launches: The three most recently launched biosimilars in 2019 (bevacizumab, trastuzumab, rituximab) achieved significant uptake in their first year, reaching nearly 60% of volume of their respective biologics by the end of their second year on the market – a much different pathway compared to their biosimilar predecessors and one perhaps indicative of what’s to come.7
  • Pipeline outlook: $60-$70 billion of biologic drug spend can be attributed to drugs that have biosimilar alternatives currently in development, meaning that about 30% more of the specialty market will soon have biosimilar competition.7
  • Patent expiration on the horizon may mean cost savings opportunities on the pharmacy benefit: Currently awaiting the availability of Humira (2023/2024) and Enbrel (2029) biosimilars, which are expected to launch once brand-name biologic patents lapse (Currently six biosimilars are approved for Humira, but none have been permitted to launch at this stage).8
  • Health plans are increasingly indicating that biosimilars have provided their organizations with meaningful cost savings9 and have moved to prefer these products on formulary: Some have even begun to promote biosimilar utilization by offering members education and monetary incentives to make the switch.10

Taken together, these highlights point to a much-changed biosimilar trajectory and market. Though “volume and price dynamics remain volatile and significant uncertainty remains,” the availability and use of biosimilar drugs is on a path to reduce overall drug costs by $100 billion across the next 5 years.7

Headwinds and Tailwinds to Uptake

While shifting market dynamics offer new hope for savings from biosimilars, employers should be aware that the same traditional barriers that stood in the way of uptake since 2015 may still be at play in the coming years.

Biosimilars still face hurdles such as:


  • A lack of physician and patient education;
  • Lower provider reimbursement for a biosimilar compared to that for the originator product;

Approved But Not Interchangeable?

FDA approval does not automatically guarantee interchangeability with the biosimilar’s brand-name counterpart. Additional FDA approval is needed for a biosimilar to be considered interchangeable before it can be substituted automatically for its brand-name drug. If the biosimilar does not receive the designation of interchangeability, it can still be prescribed and used to treat disease but will not be considered for automatic substitution.2

  • Reference product rebating practices precluding biosimilars from being the lowest net cost option (e.g., Remicade is heavily rebated on the medical side, allowing the drug to come to market at a competitive price and effectively blocking uptake of the biosimilar equivalent);
  • Interchangeability restrictions;
  • Patent litigations and settlements, and
  • Payer formulary restrictions.

These barriers are precisely why it’s taken biosimilars such a long time to gain traction much beyond some success in the oncology space.

Biosimilars in the oncology arena have done relatively well compared to their counterparts in other disease categories. Some attribute this to a lack of heavy rebating within the oncology medical channel, meaning biosimilar uptake is not readily blocked based on lower next price created through the use of temporary high rebates. Furthermore, with oncology networks largely adopting at-risk payment models (where buy-and-bill doesn’t hold much weight), oncologists are not incentivized to prescribe a more expensive drug. Finally, it is also more likely for an oncologist to start a patient on a brand-new oncology biosimilar for the first time; it is a lot more difficult to switch a satisfied Remicade patient, for example, to a different chronic medication regimen.8


The buy-and-bill process involves a health care provider purchasing, storing and administering a drug product to a patient. Once the drug is administered, a medical claim is submitted, and the provider is reimbursed at ASP+6% under Medicare Part B.

In general, health plans have been more prepared and willing to execute a preferred biosimilar strategy and have had systems in place to manage the use of these drugs under the medical benefit. A health plan’s early adoption and step-therapy strategy (vs. a parity strategy) can dramatically drive a biosimilar’s market share.

Once more opportunities emerge on the pharmacy side (Humira and Enbrel patent expirations looming), the pharmacy benefit managers (PBMs) will be expected to accelerate their strategy. There is concern from biosimilar stakeholders, however, that PBM rebate guarantees may present considerable challenges to uptake. Ultimately, biosimilar uptake will be best supported by clear interchangeability pathways, drug classes with limited rebates, physical network dynamics centered on capitated or at-risk models, patient incentives, plan design that promotes the utilization of biosimilars through lower copays, targeted copay card programs and government regulation.8

Employer Recommendations

As biosimilars begin to enter the market at a more rapid pace, there are key actions employers can take right now to drive utilization and integrate biosimilars into a strategy centered on high-value, cost-effective care.

  • 1 | Examine your vendor contracts and coverage of specialty drugs to determine the impact biosimilar adoption could have on current or future plan costs to your organization. This requires evaluating both medical and pharmacy contracts.
  • 2 | Ask your vendor partners to run a customized utilization/modeling report for all biologics for which there are biosimilars in development to understand potential for savings.
  • 3 | Talk to your vendor partners about their proposed coverage of biosimilars and policies to encourage their use. Consider a plan design strategy that encourages the lowest net cost option as a required first-line treatment for therapy naïve patients, where appropriate and available. Ask how they will be advantaging biosimilars when they happen to be in the same formulary tier as other biologics.
  • 4 | Consider creating a tiered plan design for preferred versus nonpreferred biologic and specialty drugs instead of placing biosimilars on a single existing biologic or specialty tier as a way to encourage utilization of the most cost-effective treatment.
  • 5 | Together with your vendor partners, evaluate options to provide incentives to plan members who are currently on reference biologics to switch to biosimilars when the net cost of the biosimilar is less than the reference product. Due to rebates often precluding biosimilars from being the lowest net cost option, it will be important to remain vigilant here. Talk to your vendor partners about the need for rebate transparency and forecasting and the potential to conduct a review perhaps more than once a year to evaluate what portion of net cost is attributable to rebates and what the true lowest net cost product actually is.
  • 6 | Ask your vendor partners to carve out rebate guarantees on brands once a biosimilar launches.
  • 7 | Ask how biosimilars will interact with existing and future value-based pricing arrangements negotiated with manufacturers.
  • 8 | Ensure that your vendor partners are considering ongoing economic utilization optimization reviews, particularly as more and more biosimilars are approved.
  • 9 | Understand your vendor partners’ strategy for ensuring long-term viability of biosimilars; for example, what are they doing to ensure that this market will succeed and deliver cost savings to employers? How will they approach product selection when it comes to biosimilars? Would they, or do they currently, prefer the branded equivalent to a biosimilar? If yes, why?
  • 10 | Ensure that your vendor contracts do not exclude biosimilars from rebate pass-through commitments. Also, consider including appropriate contract language to ensure that if your PBM or health plan is receiving a rebate for a biosimilar product, there will be a 100% pass-through of that amount to the client.
  • 11 | Ask about efforts being made to educate physicians to encourage the acceptance and adoption of biosimilars as safe, efficacious and cost-effective alternatives and encourage plan partners to develop provider and/or drug policy strategies to leverage biosimilars instead of branded biologics.
  • 12 | Determine what efforts you may take along with care management and patient support teams to educate your members about biosimilars and their potential for cost savings.

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  1. Headwinds and Tailwinds to Uptake
  2. Employer Recommendations