Biosimilars Could Wind Up Saving $7.8 Billion in 2021, Says California Think Tank


Biosimilars can save states billions of dollars annually, according to a new report from a libertarian think tank in California.

Total 2021savings from biosimilars are on pace to reduce total healthcare expenditures by $7.8 billion compared to spending prior to the introduction of biosimilar competition, the Pacific Research Institute Center for Medical Economics and Innovation said in a new report. The Pacific Research Institute is a California-based think tank with a libertarian, pro-market point of view.

“Should biosimilars grow to 75% of the market, which is still less than the share of the market for generic medicines in the U.S. or for biosimilars in many EU countries, the total potential savings in 2021 could be as high as $14.1 billion,” said the group’s report.

The group says reduced prescription spending would be associated with an approximately $814 million reduction in patient out-of-pocket costs.

The institute also created a tool that calculates biosimilar savings on a state-by-state basis. The Biosimilars Forum, an advocacy and research organization supported by the biosimilars industry, has the tool on its website. According to calculations made by this tool, California could save more than $1 billion annually with a 75% biosimilar adoption rate and Florida, $960 million. Texas and New York could save more than $820 million each.

“By increasing biosimilar competition, states stand to save billions if policymakers enacted simple reforms to foster a more robust biosimilars market,” said Meaghan R. Smith, executive director of the Biosimilars Forum.

“Increasing biosimilar use among physicians and patients will require a commitment from our lawmakers to remove the anticompetitive barriers to biosimilar uptake and minimize disincentives,” Smith continued. “Without competition from biosimilars, the cost of biologics will continue to increase and limit access to treatment for patients.”

Association for Accessible Medicines (AAM), a trade association for generic and biosimilar manufacturers, has performed similar calculations. By the association’s figuring, generics and biosimilars saved U.S. healthcare system almost $340 billion in spending in 2020. Biosimilar drugs saved $7.9 billion in 2020, more than tripling the $2.5 billion saved in 2019, according to AAM.

However, biosimilars were still less than 30% of volume share in markets where they competed, Christine Simmon, executive vice president of policy and strategic alliances at AAM and executive director of the organization’s Biosimilars Council, told Managed Healthcare Executive®.

“As more biosimilars are approved and brought to market, patients and taxpayers will save billions while treating serious illnesses like cancer and Crohn’s disease,” she predicted.

The Biosimilars Forum says political support for biosimilars continues to grow in Washington. Several months ago, President Biden issued an executive order directing HHS to take steps to promote biosimilar competition. The pieces of proposed legislation that would give a boost biosimilars include the BIOSIM Act (H.R. 2815) would tweak Medicare Part B payment. Simmon explained: “Currently, providers in Medicare Part B are reimbursed for administering biosimilars at the biosimilar’s average sales price (ASP), plus 6% of the brand-name biologic. The BIOSIM Act … would increase reimbursement for biosimilars by 2% to ASP+8% and would apply only when the biosimilar’s ASP is lower than the brand-name biologic’s ASP.”

The Increasing Access to Biosimilars Act (S. 1427/H.R. 2869) would direct the CMS to establish a voluntary, national demonstration project under Medicare Part B to evaluate the benefit of providing a shared savings payment for biosimilars.

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