The Banking of Biosimilars: Insights From a Leading Health Economist

Biosimilars are increasingly recognized for their potential to reduce healthcare costs and expand patient access to life-saving treatments. However, several economic and policy-related factors influence their adoption and overall impact on the health care system. To explore these critical dimensions, The American Journal of Managed Care® (AJMC®) spoke with James D. Chambers, PhD, MPharm, MSc, associate professor at the Tufts Medical Center Institute for Clinical Research and Health Policy Studies.

Chambers leads the Tufts Medical Center Specialty Drug Evidence and Coverage Database and the Medicare National Coverage Decisions Database, making him a key expert in analyzing drug policy, reimbursement trends, and health care economics. He's also partnering with Organon to share his insights as a health economist around the complex landscape of biosimilars. In this discussion, Chambers shares insights on the economic factors shaping biosimilar adoption, the barriers preventing wider uptake, and how these therapies can contribute to cost savings and improved patient access.

"What generics were to the US health care system in the 20th century is what biosimilars have the potential to become in the 21st century: a paradigm shift that may deliver more competition, increase treatment options, and may help lower costs to the health care system." — James D. Chambers, PhD, MPharm, MSc

AJMC: What role do value-based pricing models play in facilitating the integration of biosimilars into health care systems, and how can these models be optimized to better reflect the broader economic benefits?

Chambers: Value-based pricing models align product pricing with the clinical and economic value offered by biosimilars. The potential value of biosimilars in today's health care landscape is significant, as adoption may help reduce the affordability burden to the health care system. Additionally, biosimilars have similar safety and efficacy compared with the reference products and help promote affordability and support health care system sustainability. This is especially critical given the fact that a significant number of patients who need biologic treatments suffer from a chronic disease requiring lifelong management that, historically, may have come with high out-of-pocket costs, even after insurance, and could place additional strain on the health care system. Value-based pricing models can help encourage the adoption of biosimilars by mitigating the financial uncertainties linked to biologic therapies.

AJMC: What steps can health care systems take to maximize the cost-saving potential of biosimilars while ensuring they are accessible to all patients?

Chambers: While biosimilars may help reduce costs to the health care system and potentially increase access to medicines, there is no single solution; it’s a multifactorial issue that requires alignment of key stakeholders, such as physicians, payers, and pharmacy benefit managers (PBMs) alike, to usher in necessary adoption, but it’s only through aligned and collaborative efforts that we can unlock the potential value that biosimilars can create.

This also means an increase in provider education to address misconceptions about biosimilars, and the implementation of patient awareness campaigns to alleviate concerns about switching from originator products. For health care payers, it is crucial to designate biosimilars as preferred treatments in formularies and streamline prior authorization processes to facilitate their access.

AJMC: Given your expertise in health economics, what do you foresee as the biggest challenges and opportunities for biosimilars in the next 5 to 10 years?

Chambers: What generics were to the US health care system in the 20th century is what biosimilars have the potential to become in the 21st century: a paradigm shift that may deliver more competition, increase treatment options, and may help lower costs to the health care system. There are points of evidence that support that the US is seeing benefits to the health care system and to patients and the growing adoption of value-based pricing models, including outcomes-based reimbursement models, can drive biosimilar use.

For example, in a recent 2024 study my team conducted using biosimilar products in rheumatology and oncology, trends were uncovered in payer coverage, market share, and pricing that reveal that biosimilar availability has yielded cost savings despite the adoption of different coverage strategies by originator product manufacturers.

Another opportunity is the generation of robust real-world evidence, which is has the potential to demonstrate biosimilar cost-effectiveness and the impact on health care budgets.

But we still have work to do. We need to tackle some of the observed barriers— from rebate tactics and the lack of physician biosimilar familiarity, as these factors directly influence the adoption of biosimilars.

Additionally, there is growing concern that the Inflation Reduction Act (IRA), which introduces Medicare price negotiations for certain drugs, may unintentionally limit originator biologic prices. This could cap potential earnings for biosimilar manufacturers, thereby weakening the financial incentives necessary for continued biosimilar development.

Another challenge lies in the lack of clear interchangeability guidelines in some jurisdictions. This ambiguity complicates biosimilar substitution at the pharmacy level, hindering widespread adoption and undermining their cost-saving potential.

AJMC: What is the role of biosimilars in addressing healthcare disparities, particularly in resource-constrained settings, and how can health care systems ensure equitable access while maintaining cost-efficiency?

Chambers: Biosimilars have the potential to lower costs and improve access, enabling health care systems to reduce disparities in care delivery and advance equity. While biologics may only account for 2% of all prescriptions, they represent about $120 billion or 37% of net drug spending since 2014. We know biosimilars increase competition and can undercut reference product prices, thereby potentially reducing spending on treatment and increasing access, but in order for biosimilars to support health care disparities, there has to be support across all facets of the health care system—physicians, payers, and PBMs are just a few—to unlock their potential.

Health care systems can help ensure equitable access to biosimilars by centralizing procurement to enhance affordability, establishing clear interchangeability guidelines for quicker adoption, and conducting targeted education campaigns to build trust and acceptance.

AJMC: In light of evolving regulatory frameworks and changing global market dynamics, how can we future-proof biosimilars against potential policy shifts that may affect their pricing and accessibility?

Chambers: There are always shifts on the horizon, no matter the market dynamics, and because addressing barriers to adoption is a multifactorial issue, the first step is always vigilance to understand which part of the health care system may be affected and if there is an expected spillover. From there, we have to work together to understand how these policy shifts may impact biosimilars and protect them from getting lost in red tape. We know that without competition from biosimilars, reference product prices were predicted to continue to increase as they historically have, further limiting patient access to treatments, so future-proofing biosimilars is critical to ensuring the health care system—and in some cases patients—continue to reap the benefits.

As noted earlier, the concern that the IRA could weaken financial incentives for biosimilar development highlights a potential unintended consequence of evolving regulatory frameworks.

AJMC: What challenges do you anticipate in the pricing and reimbursement landscape for ustekinumab biosimilars in the US, particularly in terms of insurer acceptance and patient access, given the history of similar biologics entering the market?

Chambers: With entry into the US market, we can expect biosimilars to continue to face many of the same barriers and hurdles as those that have come before—particularly in terms of insurer acceptance. There are vast variations in how biosimilars are covered, compared to reference products, by commercial health plans.

For example, in 2019 my team conducted a study that found that US health plans covered biosimilars as “preferred” in only 14% of decisions. In 2023, another study we conducted found that among all biosimilar coverage decisions, 19.4% were covered more restrictively than their reference products. So, insurer acceptance has remained a large barrier to cross—in large part due to things like rebate walls, manufacturer negotiation power and the order in which a biosimilar enters the market. These challenges can create downstream impacts on patients, whose ability to benefit from biosimilars may depend on their health plan, potential cost savings, and their physician's knowledge and willingness to prescribe biosimilars.

That said, biosimilars of today are in a better place than they were in terms of physician/patient education and general understanding, and we have data to support that they make an impact on the health care system, and in some instances, patients. We are seeing estimated savings in the billions: from 2021 to 2025, biosimilars are estimated to save $38.4 billion to the health care system, if adopted. We are also seeing more sustained medication use thanks to biosimilars: the use of biosimilars has increased patient access, supporting more than 344 million incremental days of therapy. Biosimilars are helping to make it possible for patients to access and maintain consistent treatment—trends we anticipate will strengthen over time.