Biologic drugs treat a range of diseases such as cancer, diabetes, retinal diseases, Crohn's disease and many other conditions. Despite accounting for use by just 2% of Americans, spending on biologics is a major driver of drug spending in the United States. Biologics often come with a hefty price tag; for example, the most commonly used biologic drug, Humira, can have out-of-pocket costs that run up to $9,065 per month without insurance.
Because biologics cannot use the same approval pathway for small- molecule generics, the Biologic Price Competition and Innovation (BPCIA) created an abbreviated pathway for biosimilars to gain approval from the Food and Drug Administration (FDA) without expensive and lengthy clinical trials. The first biosimilar in the U.S. was approved and launched in late 2015. As of September 2024, the FDA has approved 59 of them.
In this brief, we examined the use of and spending on biosimilars among people with employer-sponsored insurance (ESI) between 2018 and 2022 using data from the Health Care Cost Institute. We focused on six drug product classes had approved and market-launched biosimilars in this period.
- Trastuzumab, rituximab, and bevacizumab, which are used to treat specific kinds of cancer.
- Pegfilgrastim and filgrastim, which are used to reduce the risk of infection in patients who are undergoing chemotherapy or radiation.
- Infliximab, which is used to treat rheumatoid arthritis and other autoimmune diseases.
These drugs are physician-administered injections and infusions and, therefore, are administered under the supervision of a health care professional in ambulatory settings.
Use of biosimilars among people with ESI has grown substantially since 2018
Consistent with previous research in Medicare fee for service (FFS) and commercial insurance, uptake of biosimilars in the short-acting filgrastim drug class has increased dramatically from 2018-2022 [Figure 1]. Since entry of its first biosimilar competitor (filgrastim-sndz), biosimilars have accounted for over 90% of all short-acting filgrastim administrations in 2022. Uptake of biosimilars in the trastuzumab product class also has been increasing since 2019 when its [first] biosimilar(trastuzumab-dkst) entered the market. In 2022, the biosimilar [biosimilars] accounted for 70% of all trastuzumab drug administrations. We observe similar patterns among rituximab drug administration classes.
Among the pegfilgrastim product class, biosimilars represent approximately 39% of drug administrations in 2022, which is similar to uptake in 2019 (32%) when the first biosimilar entered the market. Of the six we studied, uptake of biosimilars was lowest in the infliximab product class (33% in 2022) consistent with existing research on Medicare FFS and other commercial population. Nevertheless, we observe an acceleration in biosimilar uptake within the infliximab product class from 2021 and 2022 with use of biosimilars nearly tripling in one year (12% to 33%, respectively).
Figure 1: Uptake of biosimilar among drug classes between 2018 and 2022
Uptake of biosimilars in ESI has led to lower total spending among the six drug classes
We found that higher use of biosimilars since 2018 in the ESI population is associated with lowered total spending in the same period. Among the six product classes we studied, total spending on the administered drugs decreased by 28% from 2018 to 2022. The reduction in spending corresponds to more than $3B in savings in 2022. Overall, use of the six drug product classes was stable throughout this period. Therefore, the decrease in spending appears to be driven primarily by substitution of lower-priced biosimilars for higher-priced biologics.
Figure 2: Total ESI spending and use on drug classes of interest between 2018 and 2022
Encouraging results in uptake of biosimilars in ESI, more efforts necessary to nudge biosimilar uptake
In our brief, we found early signs of savings attributed to the market entry of biosimilars among the ESI population. Market entry of lower-priced substitutes is particularly important for ESI, a population facing high price mark-ups (relative to Medicare) for administered drugs. Except for pegfilgrastim drug class, we also found sustained year-to-year increases in uptake of biosimilar between 2018 and 2022. Our results also suggest there is further opportunity to increase use of biosimilars among some product classes.
Policies and practices that facilitate competition are likely to encourage even greater uptake of biosimilars. For example, a recent study found that most commercial payers' coverage policies listed either a biosimilar as the sole preferred drug or co-preferred drug with reference biologic. Congress is considering legislation that would make it easier for biosimilars to be considered clinically interchangeable with the reference biologic. Other policies, such as recently enacted legislation that increased Medicare FFS payment for biosimilars, are intended to increase adoption.
This analysis showed that biosimilars are making up a growing share of the market in the drug classes studied. It also found lower overall spending that coincides with the increase in biosimilar market share. At the same time, clinical studies between biologic and biosimilar in the EU have consistently found similar clinical efficacy and safety adverse events to the reference biologics. All of this suggests that policies that promote uptake of biosimilars have the potential to lower spending without sacrificing clinical effectiveness.