Washington, DC—Increasing use of biosimilar drugs will lead to even greater cost-saving than previously estimated.

That’s according to a new RAND Corporation report suggesting that biosimilar versions of complex biologic drugs could drive down U.S. healthcare spending by $54 billion over the next 10 years.

That estimate is about 20% greater than one done just 3 years ago by RAND researchers. The authors credited both improved analysis and burgeoning spending on biosimilar development for the difference.

“Biologics account for the fastest-growing segment of prescription drug spending, but biosimilars have the potential to help slow some of the increase,” explained lead author Andrew Mulcahy, PhD, a policy researcher at RAND, a nonprofit research organization. 

“However, there remains many important industry, regulatory and policy decisions to be made that will influence whether such savings are realized.”

One issue, according to the analysis, is that biologics are often so expensive that patient copays can reach several thousand dollars a year. With no more than 2% of U.S. patients being treated with the agents now, biosimilars still accounted for 38% of U.S. prescription-drug spending in 2015 and 70% of the growth in spending between 2010 and 2015, the researchers note.

The Biologics Price Competition and Innovation Act, enacted as part of the 2010 Patient Protection and Affordable Care Act, authorized the FDA to create a new approval pathway for biosimilars to enhance competition. The manufacturer of the reference biologic generally is awarded several years of patent and exclusivity protection before biosimilars, which are very close in potency, safety, and efficacy, are approved for marketing by the FDA.

RAND researchers reviewed the sales history of more than 100 biologic drugs and took a close look at the one biosimilar drug that had been marketed in the U.S. Based on that, report authors estimate that biosimilars will cut spending on biologics by about 3% over the next decade. 

Their range of savings was quite broad, however, estimated as $24 billion to $150 billion from 2018 through 2027. The researchers emphasize that biosimilars will cut costs, although not at the level of generic drugs, which are much less complex to produce.

“The actual savings hinge on the evolving competitive landscape in the pharmaceutical industry, regulatory decisions, and insurer efforts to promote biosimilar uptake through payment rates and other strategies,” Mulcahy said. “Future research will be needed as more biosimilars come to market to see whether savings are realized and who benefits from any reductions in spending.”