Opinion: Biosimilars Can Aid in Post–COVID-19 Health Care Financial Recovery

June 19, 2021

Sophia Z. Humphreys, PharmD, MHA, explains how biosimilar utilization management can enable health care institutions to put COVID-19–related financial wreckage behind them.

COVID-19 caused an overwhelming global health crisis. Worldwide, more than 176 million people were infected, and 38 million deaths were reported by June 15, 2021. The United States had over 33 million confirmed cases and more than 600,000 deaths.

The pandemic was also devastating to global economic activity. COVID-19 caused an estimated economic loss of more than $90 trillion internationally. In the United States, the gross domestic product (GDP) declined 32.9% in the second quarter of 2020. The unemployment rate rose dramatically. The strain on health care was extraordinary.

COVID-19 caused 2 primary economic setbacks to the health care system in the United States. First, health care entities suffered reduced revenue and declines in volume. These were caused by the cancellation or postponement of elective procedures and outpatient visits, along with lower emergency department (ED) utilization. From January 2020 to January 2021, ED visits dropped 24.7% nationwide. Operating room utilization was reduced 16.6%. Overall adjusted discharges decreased by 17.6%.

Second, the cost of care increased significantly due to increased labor, higher use of personal protective equipment, and medication utilization associated with the care of patients with COVID-19. Medication cost was affected more than other elements of the health care spend. For example, the average drug cost for each discharged patient* increased approximately 29%. However, the total expense for each discharged patient increased 19.6% (from February 2020 to February 2021). Clearly, there was a substantial increase in drug spend.

Midsize hospitals (200-299 beds) were hit the hardest. They saw an average increase in drug spend of 44.4%. These changes all negatively affected the health care industry’s financial performance. The March 2021 National Hospital Flash Report showed a 36% overall reduction of operating margin from February 2020 to February 2021.

Biosimilars Can Reduce Costs and Maintain High Quality Care

American health care systems large and small are actively seeking ways to increase revenue and decrease costs while providing appropriate care for patients with or without COVID-19. Many front-line clinicians have begun exploring new ways to reduce costs while maintaining the quality of patient care.

In recent years, most of the drug cost increases in the United States were due to large- molecule biologic medications. New specialty medications are among the primary drivers of the increase in overall drug costs. Most of these high-cost specialty medications are large-molecule biologic medications. In 2019, approximately $211 billion was spent on biologics, which was about 43% of the total medication spend.

There are generic products for small molecule chemical medications, but none for biologic medications, hereafter called reference products. Increasingly, there are biosimilars becoming available. These medications are highly similar in efficacy, safety, and immunogenicity to the reference products, but cost significantly less. This creates more competition in the biologic medication market. The combination of lower cost biosimilars and pressure on originators to reduce the prices of the reference products may help reduce overall costs of biologic medications writ large and reduce health care system financial burden.

Since the first biosimilar product approval in 2015, a growing number of biosimilars have been approved by the FDA. In the past 2 years, significantly greater interest in biosimilars has been observed. This is partially driven by the increasing market share of biosimilar medications. According to Fortune Business Insights, the biosimilar market size will increase from $436 million in 2018 to $17 billion in 2026. The FDA strongly supports biosimilar adoption. There are now 29 biosimilar medications approved for use, replacing 9 original reference products (aside from insulin products). IQVIA has estimated savings in excess of $100 billion associated with the use of biosimilars over the next 10 years.

Challenges to Biosimilar Adoption in the United States

There are multiple challenges for biosimilar adoption in the United States. A pharmacist may not switch from the original reference product to a biosimilar product without the prescribing physician’s authorization. The only exception to this rule would occur if the biosimilar medication were interchangeable with the original reference product. Currently, there are no biosimilars approved by the FDA that are interchangeable with original reference products.

Another challenge to biosimilar adoption is that a biosimilar cannot be approved by the FDA until 12 years after the licensure of the original reference product, to allow the innovator company a fair opportunity for financial return. Sponsors of biosimilars need to do a patent landscape assessment and consider the risks of patent litigation. As a result, many FDA-approved biosimilars have a delayed launch date. Of the 29 noninsulin biosimilars the FDA has approved in the past 5 years, only 20 have been launched.

Other factors hindering biosimilar adoption include physician and patient acceptance, third party payer preferences, and creative contracting by the original reference product manufacturers.

Innovative Management Tools Have Spurred Biosimilar Adoption

For decades, formulary decision makers developed different methodologies for medication utilization management. These were designed to reduce drug spend and increase access to care, while maintaining the quality of patient outcomes.

The emergence of biosimilars has created new opportunities to enhance and improve these tools. A strategic, comprehensive, and multidisciplinary medication utilization management program can enhance company-wide acceptance of biosimilars, decrease biologic medication costs, simplify workflow, and improve overall financial sustainability.

A real-world example of such a program is well underway at my health care institution, Providence St Joseph Health, of Renton, Washington. In the beginning of 2019, Providence developed and implemented a new biosimilar utilization management program. This program included clinical research and pharmacoeconomic analysis of available biosimilars.

Thereafter, Providence selected a preferred biosimilar to replace each original reference product for which biosimilars were available. These preferred biosimilars were built into the Providence electronic health record system as the default product for each molecule, which streamlined workflow for physicians and nurses. These initiatives saved Providence more than $27 million in the first 2 years.

New Laws May Help Improve Biosimilar Adoption in the United States

The market share of biosimilars in the United States remains moderate. Biosimilar adoption rates vary depending on launch date, therapeutic class, and indications, among many other factors. In general, the products launched earlier tend to have higher adoption rates. For example, the first filgrastim biosimilar was launched 6 years ago. The biosimilar market share has exceeded 80% for this molecule.

However, early launch does not guarantee favorable adoption rates. The biosimilar adoption rate for infliximab remains below 10% nationwide, 6 years after first launch. This medication is primarily used for maintenance treatment. Thus, biosimilar adoption faces more provider and patient hesitancy.

Some recent launches have done well. The biosimilars for 3 curative cancer biologics, bevacizumab, rituximab, and trastuzumab, were launched in late 2019, right before the COVID-19 pandemics. The adoption rate in the United States for all 3 molecules is expected to exceed 60% in 2021.

On April 23, 2021, President Biden signed The Advancing Education on Biosimilars Act, aimed at promoting biosimilar use and reducing drug cost. The supporters of this bipartisan bill hope to increase biosimilar confidence by educating providers and patients regarding the scientific background of biosimilar efficacy and safety.

The Growing Biosimilar Pipeline Holds Potential for More Savings.

The biosimilar pipeline is growing. Fifty-one percent of all reference biologic medications will face biosimilar competition in the next 5 to 10 years. There are currently more than 100 biosimilars, in various stages of development, seeking to replace 22 expensive, original reference products.These new biosimilars will generate even more savings for the health care industry. With interchangeable biosimilars on the horizon, there is considerable potential for biosimilars to reduce drug costs and enhance a financial recovery for health care. Indeed, IQVIA has estimated that biosimilars may generate over $100 billion in savings in the next 5 years.

The rise in biosimilars is providing an exciting opportunity to improve health care sustainability. Innovative medication utilization management programs, with a biosimilar medication focus, can help health care organizations improve patient access to large molecule biologics, maintain high quality patient outcomes, and accelerate post-COVID-19 financial recovery.

*The figures cited for discharged patients are based on the adjusted discharge, a calculation health care systems use to incorporate both inpatient and outpatient revenue in the evaluation of financial performance to gain an understanding of the productivity of the entire organization.