U.S. Unlikely to Save on Health Care Costs with Biosimilars in the Near Future

Biologic medicines are often life-saving therapies for serious illnesses, like cancer or genetic disorders, but they come at steep expense to patients, taxpayers and insurers. Many biologics cost tens of thousands of dollars per year per patient — some as much as $200,000. Those high biologic drug costs have a direct effect on insurance premiums and are a significant driver of health care costs for consumers, who feel their impact through increased out-of-pocket spending and in contributions to premiums.


The RAND Corporation predicted in 2014 that the introduction of biosimilars could save the United States up to $44.2 billion over 10 years. “Biosimilars are non-patented biologic products that are similar to reference biologic agents in structure, function, activity, safety, and efficacy,” Dr. Tony Yang explains.


Yang is a faculty member in CHHS’s Department of Health Administration and Policy and the lead researcher on a project that examined the reasons why we haven’t seen the kind of savings the RAND Corporation predicted. His research was published in June in JAMA Oncology.


He found that the U.S. savings from biosimilars are less than those the EU has experienced for a few reasons. Wide U.S. acceptance of biosimilars faces challenges including some being made by popular biologic makers (which keeps the price up), the FDA not having approved the interchangeability guidance, and the patent process. Additionally, the EU has had more years of experience with biosimilars and more biosimilar drugs have received regulatory approval in the EU.


To address this gap in savings, Yang recommends prompt release of the FDA guidance on using biosimilars interchangeably for their branded counterparts, approval of additional biosimilars, and regulatory changes related to patent law. He cautions that while biosimilars have been positioned as so-called cost game-changers to the pharmaceutical market, this label might be premature as it is unlikely that they will bend the health cost curve in the United States any time soon.