According to a new RAND Corporation https://www.rand.org study, Biosimilar drugs could generate $38.4 Billion in savings or 5.9% of projected total U.S. spending on biologics from 2021 to 2025.
This will be achieved by driving down prices for expensive medicines over five years used to treat illnesses such as cancer and rheumatoid arthritis. More aggressive biosimilar uptake and competition could even trigger larger cuts with savings estimated to be as large as $124.5 billion from 2021 to 2025 under the most optimistic scenario.
The study estimates that most of the expected savings from biosimilars would be caused by downward pressure on the brand-name biologics they compete with, rather than lower biosimilar prices. These findings are published by the American Journal of Managed Care.
Biologics are complex drugs manufactured in living systems and include insulin, monoclonal antibodies to block inflammation in rheumatoid arthritis, and a range of drugs to treat cancer, MS, and other serious diseases.
Biosimilars are comparable to already approved “Reference” biologics in terms of potency, safety, and efficacy, but are manufactured by different companies Biosimilars can be approved for marketing by FDA after the manufacturer of the reference biologic enjoys several years of patent and exclusivity protection.
“There are however many uncertainties in how biosimilars in the U.S will evolve over time” according to Andrew W. Mulcahy, Lead Author of the Study and a Senior Policy Researcher at RAND said, “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.”
Researchers say the achieving greater use of biosimilars across the entire U.S. healthcare system may require coordinated new policies and managed care strategies. Several policy changes could increase biosimilar uptake.
These include 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. Several of these proposals are being considered by Congress and other federal policymakers.
The HHS Office of the Assistant Secretary for Planning and Evaluation https://aspe.hhs.gov provided support for the study. Other authors of the study are Christine Buttorff, RAND, and Kenneth Finegold, Zeid El-Kilani, Jon F. Oliver, Stephen Murphy, and Amber Jessup all currently or formerly of the HHS Office of the Assistant Secretary for Planning and Evaluation.