New Analyses Point to Opportunities to Increase Savings from Biosimilar Adoption

Thursday March 25, 2021

Since the first biosimilar launched in the U.S. market five years ago, the U.S. Food and Drug Administration (FDA) has approved 29 total biosimilars to treat diseases such as cancer and autoimmune conditions. Almost two-thirds of those products are commercially available to America’s patients. However, despite meaningfully lower prices, biosimilar adoption has trailed expectations, particularly in parts of the system where biosimilars face headwinds due to reimbursement design.

In the face of those obstacles, physicians and hospitals play a critical role in biosimilar adoption, highlighting the importance of examining ways to remove obstacles that may discourage providers from utilizing lower-cost biosimilars with their patients.

That is why it is the significant increase in awareness of biosimilars is so important, due in large part to educational initiatives by the FDA as well as health care provider groups. Although ongoing efforts remain necessary, surveys have demonstrated that physicians are generally knowledgeable about and willing to prescribe biosimilars, particularly for treatment-naïve patients. Similarly, surveys have found that patients are satisfied with outcomes achieved with biosimilar products, including those patients who had begun treatment on a reference product.

New Findings

Building on progress in provider awareness, two new analyses point to other strategies that may help to remove obstacles to biosimilar adoption:

  • A new report from IQVIA identifies a correlation between Medicare payments and biosimilar adoption:
    • The relative reimbursement ratio for a biologic – defined as the difference between a product’s payment rate and acquisition price – has an impact on provider adoption. Specifically, when a reference product has a higher reimbursement ratio relative to the biosimilar, providers are less likely to adopt the biosimilar option;
    • With respect to settings of care, hospital outpatient departments–which typically receive higher overall payments than physician offices–are less likely to adopt biosimilars, in part driven by higher relative reimbursement ratios for reference products; and
    • Physicians participating in shared savings models that better align reimbursement and care, like the Oncology Care Model, were more likely to adopt biosimilars than other physicians.
  • A Bernstein Research report finds that hospitals increase the charges for reference products with biosimilar competition more than for biosimilars. This creates a financial incentive for hospitals to stock reference products.

These analyses indicate that bipartisan payment proposals, not just prescriber and patient attitudes, could be modified to increase savings and remove barriers to adoption of biosimilars. By increasing reimbursement for providers, biosimilar utilization can be increased and help drive savings for patients and the U.S. health care system. Here’s how:

  • Congress could increase the Medicare Part B add-on payment for biosimilars to 8% of the reference product’s average sales price (ASP) to help overcome some of the headwinds associated with moving patients to lower-cost biosimilars[1]; and
  • The Center for Medicare and Medicaid Innovation (CMMI) could establish a shared savings program that would allow prescribers selecting biosimilars to share in the program savings generated from that choice. Such a program could be established legislatively or under CMMI’s existing statutory authority.

Biosimilars mean new hope and therapy for patients and critical savings for taxpayers but need support from Congress and the Biden-Harris administration in order to realize the full promise of lower-cost biosimilars for patients. Recent reports project that biosimilars, if able to reach their full potential, could save the health care system more than $100 billion over the next four years. Policymakers should hasten to act on these bipartisan proposals for the health of America’s patients.

[1] For instance, Kaiser Permanente recently described their experience in Health Affairs The Case For Letting Biosimilars Compete | Health Affairs


About AAM

AAM is driven by the belief that access to safe, quality, effective medicine has a tremendous impact on a person’s life and the world around them. Generic and biosimilar medicines improve people’s lives, improving society and the economy in turn. AAM represents the manufacturers and distributors of finished generic pharmaceuticals and biosimilars, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals are 90 percent of prescriptions dispensed in the U.S. but only 20 percent of total drug spending.  

About the Biosimilars Council

The Biosimilars Council, a division of the Association for Accessible Medicines (AAM), works to ensure a positive environment for patient access to biosimilar medicines. The Biosimilars Council is a leading source for information about the safety and efficacy of more affordable alternatives to costly brand biologic medicines. Areas of focus include public and health expert education, strategic partnerships, government affairs, legal affairs and regulatory policy. More information is available at www.biosimilarscouncil.org.

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