Published January 18, 2022 News and Trends What Is the Future of Cost Savings With Biosimilar Drugs? By Staff Washington, DC—From their introduction, biosimilar drugs have held out the promise of lowering costs for some of the most expensive cutting-edge medications. Has that occurred?A new study from the RAND Corporation suggests that use of biosimilar drugs could push down prices for therapies for cancer and rheumatoid arthritis, with savings estimated to be $38.4 billion or 5.9% of projected total U.S. spending on biologics from 2021 to 2025.Furthermore, according to the report in the American Journal of Managed Care, if used more aggressively, biosimilar use could create savings as great as $124.5 billion from 2021 to 2025, although that is the most optimistic scenario.Most of the expected savings from biosimilars would result from competitive pressure on the brand-name biologics with which they compete, not lower biosimilar prices, RAND researchers point out."Biosimilars have the potential to lower spending on biologic drugs that account for a rapidly increasing share of overall U.S. prescription drug spending," explained lead author Andrew W. Mulcahy, PhD, a senior policy researcher at RAND, a nonprofit research organization.The article explains that biologics include insulin, monoclonal antibodies to block inflammation in rheumatoid arthritis, and a range of drugs to treat cancer, multiple sclerosis, and other serious diseases. They accounted for only 2% of U.S. prescriptions by volume in 2017 but made up 37% of net spending on prescription drugs, according to the authors.Biosimilars are considered comparable to already approved "reference" biologics in terms of potency, safety, and efficacy, but they are manufactured by different companies. For the study, researchers projected spending from 2021 to 2025 on 60 biologics under three scenarios, using analysis of U.S. volume and price data for biologics already facing competition from biosimilars from 2014 to 2020. The RAND models included both biologics that already have biosimilar competition and those that likely will have competition in coming years.The authors explain that, for already-marketed biosimilars, savings were calculated in relation to market shares and prices in the 4th quarter of 2020. Still, they note, about two-thirds of savings from biosimilars were from biosimilars expected to be launched from 2021 to 2025.The largest contributors to those savings were biosimilars to Humira (adalimumab), totaling $19.5 billion. RAND notes that the remaining one-third of savings were from both greater use and lower prices for already-marketed biosimilars.One issue, according to the report, is the "interchangeability" of biosimilars with reference biologics. Currently, only one currently marketed US biosimilar, Semglee, a biosimilar to insulin glargine, has this designation, the authors note. "Interchangeable biosimilars may be perceived as closer substitutes to reference biologics, and as a result, they may achieve larger market shares and yield steeper price reductions in reference biologics than we considered in our modeling scenarios. Interchangeable biosimilars may also give managed care plans greater ability to steer utilization toward the lower-cost versions and give pharmacists incentives to select the version with the lowest acquisition cost."The authors add, "Given consistent insulin price increases, recent regulatory actions, and the growing call to designate these products as "interchangeable," additional insulin biosimilar manufacturers may pursue interchangeability. Although insulins accounted for a small share of savings under our main approach ($4.1 billion, or 10.6%), this value increased to $13.9 billion under more aggressive assumptions on biosimilar entry, uptake, and price competition, all of which may be more feasible with an interchangeable designation. Beyond insulins, there is already one approved (but not yet sold) interchangeable biosimilar to Humira (adalimumab), with potentially more on the horizon. Interchangeable adalimumab biosimilars may accelerate price reductions and volume share growth."While the overall estimated savings in the study are less than in two other recent assessments, including one from RAND, the authors point out that new analysis uses more current data to make estimates, more comprehensively breaks down savings by source and biologic and is more transparent on the baseline case used to calculate savings."There are many uncertainties in how biosimilars in the United States will evolve over time," Dr. Mulcahy 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."The content contained in this article is for informational purposes only. The content is not intended to be a substitute for professional advice. Reliance on any information provided in this article is solely at your own risk. « Click here to return to Weekly News.