Biosimilars in the United States: Current Status and Future Implications
Biosimilars in the United States: Current Status and Future Implications
July 16, 2018
6 min read

Biosimilar Barriers Persist Despite Billions in Potential Cost Savings: Who is Benefitting?

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Wayne H. Winegarden

Many health care researchers wake up each morning and head to the laboratory with the hope of achieving something like a promise. That promise is simple: an effective, affordable drug. As most rheumatologists know, biosimilar medications carry with them the once-in-a-generation capacity to deliver on that promise.

Most rheumatologists expect — or at least hope — that these drugs will be on every formulary for daily use. At the moment, they are not. However, a pair of recent developments regarding the potential savings that could be gained from more widespread use of biosimilars, as opposed to their biologic reference products, may help push that promise closer to fulfillment.

The first was a study by Wayne H. Winegarden, PhD, senior fellow in business and economics at the Pacific Research Institute, which demonstrated the savings that could result from use of the biosimilar versions of infliximab (Remicade, Janssen). The second was a statement from FDA commissioner Scott Gottlieb, MD, outlining plans for a draft guidance for data to determine whether a proposed biosimilar is indeed similar to the reference product.

Biosimilars could possibly fulfill the promise of providing effective, affordable drugs for patients, according to experts.
Source: Shutterstock

“Biosimilars foster competition and can lower the cost of biologic treatments for patients, yet the market for these products is not advancing as quickly as I hoped,” Gottlieb said in the statement. “I believe that the FDA can do more to support the development of biosimilars, as well as promote the market acceptance of these products. As the cost to develop a single biosimilar product can reach hundreds of millions of dollars, it’s important that we advance policies that help make the development of biosimilar products more efficient, and patient and provider acceptance more certain.”

It is more than just a matter of development and market forces, however; widespread biosimilar utilization also hinges on who will benefit from the savings: patients, payers or pharmacy benefit managers (PBMs).

Alan Gibofsky, MD
Allan Gibofsky

Allan Gibofsky, MD, JD, professor of medicine and public health at Weill Medical College of Cornell University and attending rheumatologist at the Hospital for Special Surgery in New York City, weighed in. “It is a major concern that the potential benefits of biosimilar medications have not been trickling down to patients,” he said. “Clearly, it was also a major concern to the commissioner. Hopefully, this will lead to reduced costs of manufacturing and the drugs being more readily available to the patients who need them.”

Impediments to significant savings

Zeroing in on infliximab, researchers from the Pacific Research Institute determined that per patient, savings associated with the biosimilar would be between $2,100 and $4,400 annually. If biosimilars managed to take 50% of the market for infliximab, for example, employer-sponsored health plans could save 8.4%, or between $262 million and $315 million, according to the findings. An 8.1% savings totaling $150 million could be seen for taxpayers if Medicare was to adopt usage of the biosimilar equivalent of Remicade. With use of the biosimilar of this single drug, the U.S. health care system could save as much as $412 million to $465 million annually, according to Winegarden and colleagues.

“Applying these savings to the 40 different biosimilar medicines approved for use in Europe, tens of billions of dollars in annual health care savings are attainable if a robust biosimilar market in the U.S. develops,” the researchers wrote. “The existence of these potential savings is an indication that the slower than expected adoption of biosimilars is due to market and regulatory barriers that inefficiently discourage their use.”

The “buy-and-bill” system for purchasing biosimilars tops the list of reasons why these drugs are not more widely used, followed by the fail-first policies endorsed by many health insurance plans, and what Winegarden and colleagues called “excessive regulatory uncertainty.” The result is bias against biosimilar drugs.

“An efficient pharmaceutical market must balance two competing interests: promote innovation to create new cures, and promote competition to make those cures more affordable — it is a tricky balancing act,” Winegarden said in an interview with Healio Rheumatology. “For traditional medicines, thanks to the Hatch-Waxman Act, this balance has been struck reasonably well. For the latest medicines based on living organisms, however, this balance has not yet been struck in the U.S. There have been tremendous innovations with the introductions of new biologic medicines, but the competitive medicines — biosimilars — are lagging.”

Who is benefitting?

Many experts have opinions about where the potential savings are going. “This is a tricky question due to the complexity of the pharmaceutical pricing process,” Winegarden said. “Due to this convoluted process, the employer-sponsored health plans stand to benefit the most since they bear the majority of the costs. Patients also stand to benefit through lower copays and not reaching coverage maximums.”

The idea that patients stand to benefit, but do not yet benefit, is the key problem for Gibofsky. “Pharmacy benefit managers make money based on rebates from manufacturers,” he said, but noted that these rebates are often passed to insurance companies and other businesses that have contracts with the PBMs. “PBMs get paid on the difference. Health plans have significant financial disincentive to switch to the biosimilars, because they are cheaper.”

The statement from Gottlieb is encouraging to Gibofsky, who offered pointed solutions to the current predicament. “It is important for managed cost companies to reduce prior authorization impediments,” he said, but noted that he hasn’t seen evidence of this as yet. “Ultimately, the consumer is still not benefiting from the cost savings. The best way to pass the savings to the patient is to reduce the administrative hurdles for physicians.”

Further, Gibofsky added that mechanisms are in place for biosimilars to have a larger market presence due to the Biosimilar User Fee Act of 2017, which allows for an expedited review process for the drugs. For some, this legislation is reminiscent of Hatch-Waxman in 1984. “Just as generics have a shorter pathway to sale, Congress has already created that pathway for biosimilars using 351(k),” he said.

Winegarden agreed. “There has been some progress on this front, but finalization of the regulations by the FDA is necessary,” he said. “These regulations should ensure that the regulatory process for biosimilars is as low-cost and efficient as possible while still ensuring safety and efficacy. These policy reforms are necessary to help promote biosimilars to ensure greater competition.”

 It is important that regulatory factors are clarified and improved, according to Winegarden. “The Hatch-Waxman Act demonstrates the benefits when the regulatory balance is struck well,” he said. “The U.S. drives global pharmaceutical innovation and has the largest generic market of the Organization for Economic Cooperation and Development, at 89%. This is the balance that needs to be struck for the biologic/biosimilar market.”

A call to action

As these regulatory- and industry-level factors play out, Gibofsky encouraged practicing rheumatologists to get involved. “Prescribers need to make patients aware of where costs are being saved,” he said. “Specifically, that it is not the patients that are benefiting, but rather PBMs and payers.”

Organizations like the American College of Rheumatology and EULAR also have a role, according to Gibofsky. “Societies that have endorsed the use of biosimilars need to take the next step and ensure that cost savings are being passed along to patients,” he said. While these societies are advocating use of biosimilars, Gibofsky suggested that evidence of taking those crucial next steps remains to be seen.

The good news, for Gibofsky, is that this is familiar territory for rheumatologists. “Clinicians in our specialty have always been concerned about the cost of drugs,” he said. “There has always been outrage about such things. In the current situation, I would say that the payers hold 51 cards, but rheumatologists hold the ace of spades. If you are going to force me to use a drug and my patient is not going to see a cost benefit as a result, my other card is to use a different drug. If that different drug is also part of your formulary, it will be difficult for you to force me not to use it. Maintaining this kind of pressure can get biosimilars onto the formularies to stay.” – by Rob Volansky

For more information:

Allan Gibofsky, MD, JD, can be reached at 535 E. 70th St, New York, NY 10021; email:

Wayne H. Winegarden, PhD, can be reached at 101 Montgomery Street, Suite 1300, San Francisco, CA 94104; email:

Disclosures: Gibofsky reports he is a stockholder in AbbVie, Amgen, Bristol-Myers Squibb, GSK, Johnson & Johnson, Pfizer and Regeneron; is a consultant for AbbVie, Amgen, AstraZeneca, Celgene, Horizon, Iroko, Medac, Pfizer, Relburn, and Takeda; and is a speaker for AbbVie, Amgen, Celgene and Pfizer. Winegarden reports no relevant financial disclosures.