How Much Money Would More Use of Biosimilars Save?

By July 19, 2019 Commentary

The introduction of generic drugs, which have a chemically identical active ingredient to a brand-name drug on which patent protection has expired, has saved enormous amounts of money on drug spending.  Over 85% of all prescriptions are now for generics.  Biosimilars are intended to provide a generic for biologic therapies.  But since those products are more complex, the cost and process for developing them is higher.  And of course the drug companies are playing their usual games to prevent competition.  A brief from the Pacific Research Institute’s Center for Medical Economics and Innovation explores potential savings if there was greater use of biosimilars.    (Pac. Res. Paper)    Off a baseline of all original biologic use, currently we are saving about $250 million through use of biosimilars.  There are only 9 current therapies where a biosimilar is approved.  If just for those categories, biosimilar use rose to 25%, we would save $2.5 billion, at 50% $4.8 billion and at 75%, $7.2 billion.  While there may be clinical reasons why biosimilar usage would not be 100%, it should get close to that.  And if biosimilar use grows dramatically, prices for those biosimilars should come down, providing even greater savings.  Biosimilar development has been thwarted by drug company lobbying and lawsuits and by payoffs to biosimilar developers.  Congress and the FDA need to take stronger action to facilitate, even subsidize biosimilar development and to allow payers to require their use except when clinically inappropriate.  Europe has been much more aggressive in approving biosimilars and has reaped substantial savings.  We should do the same.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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