Medicare Price Negotiations Will Slow Biosimilar Momentum, Widening Market Gap

Government price negotiations for certain products under the Inflation Reduction Act (IRA) that aimed to rein in high drug costs may have had unintended consequences for biosimilar development, according to a new report from Matrix Global Advisors (MGA).1

The report comes after a separate IQVIA Institute for Human Data Science report claimed that the globe could face what the report called a “biosimilar void.”2 Essentially, 90% of the biologics scheduled to lose exclusivity in the next decade, valued at $234 billion, do not currently have biosimilars in development, showcasing a large, missed opportunity for developers.

Although the negotiated prices don’t go into effect until 2026, the first 10 products chosen for the program have been announced.3 Only products that were not at risk of having biosimilars enter the market in the next few years were supposed to be eligible for Medicare price negotiation. However, the initial list includes Stelara (ustekinumab) and Enbrel (etanercept). Several biosimilars for Stelara are currently on the market, and 2 biosimilars for Enbrel (etanercept) have been approved by the FDA, with potential launches scheduled for 2029.4,5

“Almost all the Medicare negotiated drugs have a generic or biosimilar equivalent in the pipeline, which in turn have a significantly lower cost,” said John Murphy III, president and CEO of the Association for Accessible Medicines, in a statement on the report.6 “The Medicare drug price negotiation program artificially extends the lifecycle of the brand version, resulting in higher costs for seniors.

The MGA analysis quantified the real-world implications not only on the cost of medicines but also on the long-term negative impact on future development of generics and biosimilars, which will result in fewer competitors and more delayed competition. The better option is the proven success of reducing drug prices through generic and biosimilar competition.”

The analysis revealed that the threat of price negotiations might deter manufacturers from launching biosimilars, especially for high-sales biologics.1 A 2024 Samsung Bioepis report indicated that after entering the market, biosimilars typically achieved a 53% market share with an average 53% decline in sales price relative to the reference biologic over 5 years.7 However, given the risks and costs involved, the MGA report estimated that for each biologic with $3.5 billion in annual sales, potentially $1.9 billion in annual savings could be lost if biosimilar entry was delayed due to government negotiations.1

“In the current environment, the threat of government intervention appears to be chilling the incentives for biosimilar manufacturers to enter and compete effectively in the market,” noted the report. Unlike generics, biosimilars require steep investment, and future revenues often remain uncertain. That long timeline and financial risk, combined with government pricing uncertainty, appeared to be making some manufacturers think twice before investing.

Long-term Implications for Access and Cost

The report highlighted that these delays could impact patient access to affordable biologic therapies. Biosimilars serve as a crucial mechanism to lower treatment costs for complex conditions such as rheumatoid arthritis and certain cancers. Yet, the hesitancy among manufacturers resulting from the policy environment could blunt this potential.

According to Samsung Bioepis’ report, biosimilars continued to reduce prices by 24% to 76%, depending on therapeutic areas, but the “chilling effect” posed a threat to widespread continued price declines and broader market penetration in the future.7 “The reluctance of firms to develop biosimilars due to the risk of government price negotiations will hinder the full realization of biosimilar cost savings,” the present report stressed.1

Recommendations to Address the Biosimilar Gap

To mitigate the detrimental effects of the so-called “biosimilar void,” the report offered several policy recommendations. Foremost among these was re-evaluating the use of price negotiations as a tool for controlling drug costs, emphasizing the importance of fostering competitive markets instead of suppressing biosimilar market entry.

Experts suggested that policy efforts should focus on reducing anticompetitive behaviors, including patent thickets that delay biosimilar approvals. The authors highlighted that patent thickets can impede biosimilar entry, and addressing these barriers could unlock significant savings and increase biosimilar availability.

Additionally, the report called for improved market transparency and targeted incentives for biosimilar manufacturers. “Creating a more predictable and supportive environment for biosimilar development could significantly narrow the current void," the authors wrote.

While policies aimed at reducing drug costs are vital, the report cautioned that aggressive government price negotiations might inadvertently stifle biosimilar development, ultimately undermining efforts to make biologic therapies more affordable. Moving forward, policymakers were encouraged to balance cost containment measures with strategies designed to promote biosimilar competition, ensuring equitable access to these complex therapies for patients and health systems alike.

References

1. Brill A, Robinson C. Long-term effects of Medicare price negotiations on drug competition. Matrix Global Advisors. July 14, 2025. Accessed July 15, 2025. https://accessiblemeds.org/wp-content/uploads/2025/07/Matrix_Global_Advisors_Long-Term_Effects_of_Medicare_Drug_Price_Negotiations.pdf

2. Jeremias S. The biosimilar void: 90% of biologics coming off patent will lack biosimilars. The Center for Biosimilars®. February 5, 2025. Accessed July 15, 2025. https://www.centerforbiosimilars.com/view/the-biosimilar-void-90-of-biologics-coming-off-patent-will-lack-biosimilars

3. Jeremias S. Stelara and Enbrel chosen for IRA price negotiation. The Center for Biosimilars. August 29, 2023. Accessed July 15, 2025. https://www.centerforbiosimilars.com/view/stelara-and-enbrel-chosen-for-ira-price-negotiation

4. Jeremias S. More ustekinumab biosimilars join US market share fight. The Center for Biosimilars. March 13, 2023. Accessed July 15, 2025. https://www.centerforbiosimilars.com/view/more-ustekinumab-biosimilars-join-us-market-share-fight

5. Biosimilar approvals. The Center for Biosimilars. Updated July 1, 2025. Accessed July 15, 2025. https://www.centerforbiosimilars.com/biosimilar-approvals

6. Medicare drug price negotiation has chilling effect on generic and biosimilar medicines development and availability. News release. Association for Accessible Medicines. July 15, 2025. Accessed July 15, 2025. https://accessiblemeds.org/resources/press-releases/medicare-drug-price-negotiation-has-chilling-effect-on-generic-and-biosimilar-medicines-development-and-availability

7. Santoro C. Samsung Bioepis reports 2024 biosimilar market growth trends. AJMC®. October 15, 2024. Accessed July 15, 2025. https://www.ajmc.com/view/samsung-bioepis-reports-2024-biosimilar-market-growth-trends