Why biosimilars keep losing ground to brand-name rivals: A Q&A with Christine Johnston

Biosimilar dispensing rates fell more than 40% between 2024 and 2025, according to data from the Association for Accessible Medicines (AAM) — a surprising reversal for drugs that were supposed to be pharmacy benefits’ biggest cost-saving story. Instead of migrating from brand-name biologics like Humira and Stelara to their lower-cost biosimilar counterparts, patients are increasingly being steered toward newer branded competitors such as Skyrizi, Rinvoq and Tremfya, even though biosimilars can cost roughly $600 a month compared with $6,000 for branded alternatives.

To understand what’s behind that shift, Managed Healthcare Executive spoke with Christine Johnston, president and co-founder of Foundational Pharmacy Strategies, about the rebate incentives, formulary strategies and regulatory landscape shaping biosimilar access today.

Johnston argues the decline has little to do with clinical performance and everything to do with how pharmacy benefit managers are compensated. Because rebates are calculated as a percentage of a drug’s list price rather than its net cost, higher-priced brand drugs can generate larger rebates than their biosimilar alternatives, an incentive structure she says rewards the more expensive option. She also points to the outsized influence of the three largest PBMs, which together administer roughly 80% of prescriptions dispensed in the U.S. and control formulary placement, prior authorization, and specialty pharmacy dispensing.

In this conversation, Johnston walks through how pending legislation on biosimilar interchangeability could change that calculus, why she’s concerned about a thinning biosimilar pipeline heading into the next wave of patent expirations in the 2030s, and what she thinks health plan executives and employers should be asking their PBMs right now. She also discusses disparities in biosimilar adoption across Medicaid, Medicare, and commercial insurance, and what she believes payers need to do to hold their PBMs accountable.

The conversation below has been edited for length and clarity.

Managed Healthcare Executive (MHE): AAM’s own data shows that biosimilar dispensing rates are falling more than 40% between 2024 and 2025. From where you sit, what is driving that decline, and what should PBMs be keeping in mind?

Christine Johnston: I think what we’ve been seeing is that there was a release of the Humira and Stelara biosimilars in 2023 and 2024, and what we’ve been seeing is that drug manufacturers like AbbVie have competitive drugs out there like Skyrizi and Rinvoq, and what they’re doing is head-to-head trials to show how their newer drugs are superior to the legacy drugs, the Humira. So we’re seeing a lot of PBMs putting those newer drugs rather than the biosimilars in preference. Rather than people moving from Humira to the biosimilar, or Stelara to the biosimilar, they’re moving to Rinvoq, Tremfya or Skyrizi. We had an initial uptick of the biosimilars, but now what we’re seeing is people moving to these other brand medications that treat the same conditions.

MHE: In your opinion, is that a good move or a bad move? What should PBMs be keeping in mind with that?

Christine Johnston: I think it’s a bad move, in my opinion, to not adopt the biosimilars. We’re not seeing that these newer drugs are really superior — better results. They maybe add some convenience — maybe there’s a pill form. But when we come to the clinical results, out in the world, there’s not really that much superiority. And when you can get a drug for $600 a month compared with $6,000 a month, the cost just really isn’t there for the benefit. So I think it’s really doing a disservice to our industry, as well as our society, to have these higher-cost drugs being utilized, because for so many conditions, it’s one of the main drivers of trend in pharmacy spend.

MHE: Rebates are typically calculated as a percentage of list price. Can you walk me through what that structure can end up rewarding — rewarding the more expensive drug rather than the biosimilar?

Christine Johnston: Rebates are usually a percentage of what’s called wholesale acquisition cost, which in the industry has been coined as the list price. It’s really an arbitrary number — I’m not going to get into that today — but it doesn’t take into account what’s actually paid at the point of sale after discounts, as well as after any other rebates. So it’s an inflated number. The higher the number, the higher the rebate, because it’s a percentage. And then drug manufacturers and PBMs negotiate that if they get a certain percentage market share — say, of the anti-inflammatory drug products, if their market share was X percentage — they also get an additional bonus payment. If they have multiple drugs manufactured by those drug manufacturers on the formulary in a preferred status, they can also get a higher rebate. I’ll give you an example: if you want to remove Humira from the formulary, AbbVie was saying you then also wouldn’t get the rebate for Skyrizi or Rinvoq. So you have to keep all three of them on the formulary [in order toto] benefit from the rebate. It really has been structured so that the more expensive drugs are able to capture larger market share.

MHE: When manufacturers say that PBM-affiliated insurers and pharmacists are the ones deciding what’s covered, is that a fair characterization of how those incentives actually work? Can you explain why?

Christine Johnston: In a typical PBM arrangement — and keep in mind that the big three PBMs control 80% of the drugs dispensed in our country — they typically are the ones who decide what drugs are on formulary. They’re also the ones who administer the prior authorization criteria, so they decide if patients qualify for those medications. And most importantly, they’re the ones who dispense the medication from their specialty pharmacy. Because they’re getting a portion of their rebates through their group purchasing organization, as well as capturing — I think it’s estimated [about 3approximately] 35% of their revenue — through the specialty pharmacy, there really isn’t an incentive to control the coverage of these drugs or reduce the use of the higher-cost brand medications in this drug class. So they make a decision on whether it’s clinically effective to add a drug to formulary, but then, because of all the other cost benefits, they decide whether or not to have it on the formulary. Most employers don’t have the clinical expertise or even the contractual ability to decide “this drug is covered over this drug” — they have to rely on their PBM to do that. So yeah, ultimately, the PBM controls it.

MHE: There are a lot of bills under consideration that would make approved biosimilars substitutable without additional studies and reduce clinical testing requirements. If those pass, what changes operationally for a PBM — what would happen the next day — and what are your immediate thoughts or concerns?

Christine Johnston: The next day it won’t change, because they still have to go through the whole formulary and P&T committee review. But today, generic medications — the alternatives to brand medications — can be automatically substituted by the pharmacist at the pharmacy. For example, if you have a prescription for Adderall, the pharmacist doesn’t have to ask the doctor’s permission to dispense the generic. But with biosimilars, since they’re not interchangeable, the doctor must write a new prescription [in order toto] dispense the biosimilar. If they become interchangeable, which is what a lot of the new laws are proposing, that can happen automatically. But that drug also has to be allowed on the formulary, and there’s a lot of what’s called brand-over-generic strategy that PBMs do, where they continue to prefer the brand over the generic — we see this today with Synthroid continuing to have a preference over levothyroxine because there’s a rebate on it. So in addition to interchangeability, we’d also need PBMs to change their formulary strategies. But it definitely makes it a lot easier, because then you don’t have to convince the physician to change what they’re doing — it’s just more automatic.

MHE: Does that raise any concerns for you?

Christine Johnston: I think it’s great. I think biosimilars should be interchangeable — they go through the same level of rigor that a new drug review goes through, and as long as they’re achieving the same results as the initial drug, I think it’s great. I don’t know why — well, I do know why. It’s because there was concern that the way they’re manufactured could affect the quality of the drugs. But there have been numerous studies internationally showing that they have the exact same results, and the quality standards are up to par. So I think right now we’re in a good position to allow biosimilars to be interchangeable.

MHE: Does easier substitutability shift leverage away from rebate negotiations and toward something else? If so, what?

Christine Johnston: That’s a great question. I would say it really forces PBMs and drug manufacturers to justify why they may put the original drug at a preferred status. I think there will still be a fight to keep that drug in preferred status, but it’s going to force them to justify why there’s a clinical advantage to having it there. So my biggest concern isn’t really the brand-versus-exact-biosimilar question. What I see is that we need to start looking, as an industry, at which drugs within a certain therapeutic class are better and more cost-effective — not just the exact match of drugs. We have Enbrel, Humira, Skyrizi, Rinvoq, and Tremfya — all these drugs in that class — and now we have biosimilars in that class too. The question is: which ones are being preferred, why are they clinically better, and is the additional cost they come with to be in preferred status really justified?

MHE: Some of these proposals effectively narrow the gap between “biosimilar” and “interchangeable.” Does that distinction matter to you and your formulary committee, or has it already stopped mattering in practice?

Christine Johnston: It does matter. There’s a lot of conversation about interchangeability. A lot of these drugs — for example, a biosimilar may not be approved for use in childhood Crohn’s disease. Because these conditions are so specific — rheumatoid arthritis, psoriasis, Crohn’s, and so on — having that interchangeability is really important so we can broaden the reach of what these biosimilars can treat. I also wanted to talk about the Consolidated Appropriations Act of 2026 and how that factors in, because I think that’s more far-reaching legislation. What that does is: if a PBM puts a certain drug on the formulary that costs more than another drug, they have to provide justification as to why. If interchangeability laws come into play and there’s no longer an excuse or reason why a drug can’t be on the formulary, PBMs are really going to be forced to justify, on a cost basis, why they have one drug preferred over another. I think the combination of the Consolidated Appropriations Act and the interchangeability laws being proposed will have a huge impact on our ability to increase the utilization of biosimilars.

MHE: This is anecdotal, but I’ve spoken with nurses who work in infusion centers who’ve described situations where a patient is switched to a biosimilar and has a reaction to it, and then runs into pushback from the insurer when they try to switch back to the original drug. What do you think can be done to smooth over that process?

Christine Johnston: I hear a lot of anecdotes like that, and I wonder where those concerns are coming from. A high-quality PBM with good formulary criteria and prior authorization criteria should always have a process where, if a patient isn’t seeing a benefit from the medication or is having a negative result, they can go back to the previous drug. I feel very strongly about that in prior authorization criteria — there always has to be a medical necessity override process, and honestly, our system is set up to support that. Every ERISA plan, for example, has to have an independent review entity in place to act essentially as an advocate for the patient. So if that becomes a problem, it sounds like it’s a PBM that isn’t following the rules that are already in place and needs to be held to them.

MHE: Is there a version of PBM reform in these bills that you’d really welcome, versus one your industry is likely to push back on?

Christine Johnston: I think the justification piece — why one drug is preferred over another — we ask PBMs that on a regular basis. Why are we seeing a lot more utilization of these high-cost brands and not an increase in the biosimilars, when they’re obviously much cheaper? There’s no requirement today for PBMs to justify that, or to provide us the net cost after rebates. This law would require that — it’s enacted, but it hasn’t gone through the rulemaking process yet, and I’m concerned that as it goes through rulemaking, it’s going to get watered down. We really need to be looking at the cost-benefit of the various drugs within the exact same therapeutic class, not just, say, Humira versus the Humira biosimilar — Skyrizi doesn’t technically have a biosimilar, so we can’t directly compare it to the Humira biosimilar. We really need to be looking at cost-effectiveness across the entire therapeutic class, not just drug to drug.

MHE: Looking ahead to 2027 — zero biosimilars are currently in development for any biologic losing patent protection in the 2030s. Is that a five-alarm number to you, or is it too early to read much into it?

Christine Johnston: It’s a big concern, because we have a lot of drugs — like cancer treatments — that would be eligible for a biosimilar coming up, and specialty medications are typically at least 54% of a plan’s cost, sometimes more and we need cost relief in this area. When groups have truly leveraged a biosimilar strategy, we’ve seen significant cost reductions with no compromise in quality. But the fact that we’re not seeing biosimilars in the pipeline is a significant concern, because it takes a long time to develop these, it takes a long time for FDA approval, and then there are patent lawsuits manufacturers always have to factor into development. I’m concerned that the industry as a whole is saying it’s not worth it — we’ve structurally set up too many barriers, and the industry doesn’t encourage market competitiveness. That’s very different from what we see in the rest of the world — the UK, New Zealand, and Australia have high adoption of biosimilars, and drug manufacturers are interested in making those drugs available there.

MHE: Does that feel like par for the course when it comes to American healthcare compared with other countries?

Christine Johnston: Yeah, unfortunately our healthcare system is performing as it’s structurally designed, and that’s not necessarily in the best interest of patients or payers.

MHE: If nothing changes about the rebate structure or the pipeline gap, what does the market actually look like in 2027? And what’s one policy or market signal you’re personally watching most closely right now as an early indicator of which direction it’s going?

Christine Johnston: One of the big things I think about is that Humira and Skyrizi are pretty much the exact same drug — they’re made by the same manufacturer, with minor changes, but from a clinical perspective, they’re not that different. When we don’t have the pressure of generics in the marketplace, the way we’ve seen on the other side of the business, it doesn’t force drug manufacturers to find innovative strategies. What they keep doing is producing what we call “me-too” drugs — drugs that are basically the same thing, but maybe delivered differently, less frequently or in a pill form. When you introduce generic or biosimilar competition, drug manufacturers start looking at solving other problems. My concern is that without the demand pressure biosimilars put on specialty drugs, we’re going to see less innovation and less research on conditions that currently don’t have any treatments — like Alzheimer’s, where there’s still no treatment. If manufacturers are focused on developing me-too drugs that solve already-existing problems, is there going to be a market incentive to really invest in Alzheimer’s treatment? I don’t know. When you stifle competitiveness, you stifle research and you stifle innovation.

MHE: If you had one message for a health plan executive who assumes biosimilars are just quietly succeeding in the background, what would you tell them — or warn them about?

Christine Johnston: I would ask them to look at their latest PBM report and see what their top 25 drugs are. If Skyrizi, Rinvoq, or Tremfya are on that top 25 list, and it doesn’t include one of the biosimilars for Humira or Stelara, I’d be questioning my PBM on their formulary strategy and whether their incentives are aligned with my incentive to manage cost. If one of those drugs is on your top 25, chances are the PBM isn’t doing the proper cost-benefit analysis to make sure the right drugs at the right cost are being covered for you. I’d ask them to review their formulary policies related to that drug class to make sure the PBM is acting in your best interest, because you trust them to do that — and if those drugs are on the top 25 list, I guarantee they’re not.

MHE: Is there anything you hope fellow PBMs and people in this space walk away with heading into 2027? What would your biggest wish-list change be?

Christine Johnston: I think the biggest thing I wish I heard from the people responsible for paying the bill from the PBM — whether that’s a health plan executive or an employer group — is that because you pay the bills, you have the power to ask questions to make sure the PBM is structuring the formulary in the best interest of not just your bottom line but also the patients you represent. I think a lot of people believe they can’t question the PBM on decisions about what’s a formulary drug or non-formulary drug, or how prior authorizations work — but they can, if they’re paying the bills. I really want payers to feel empowered that this is their plan. It’s not the PBM’s plan, and they should make sure the PBM is acting in their best interest.

MHE: Do you think disparities in demographics — race, gender, class — factor into biosimilar access at all?

Christine Johnston: In the Medicaid space, there’s been a lot of adoption of biosimilars — more than what we see in Medicare, the commercial space, or employer-sponsored benefits. Medicaid plans have been forced, because of financial pressures, to make sure they’re truly preferring the lowest-cost drugs. I’d say it’s more about access through employer-sponsored insurance — people who have insurance through their employer, who are typically not the unemployed, tend to have access to the higher-cost drugs. But I don’t know that that’s necessarily a better thing — it means their premiums are higher, even if the overall costs feel “better” to them. I think we have a perception in this country that more expensive equals better, and I don’t know that it’s true. I drive a Honda — I don’t know that it’s that much worse than a Lexus. Maybe it doesn’t have all the bells and whistles, but they’re made on the same line. I don’t feel shortchanged driving my Honda, if that’s a fair analogy.

MHE: Is there anything else you’d like to add?

Christine Johnston: Make sure that, as a plan sponsor, you have access to your data — not just your claims data, but your rebate data — so you understand the net result of what you’re paying. A lot of times, people just get a number for their rebate, but they don’t know which drugs it’s attributed to. Also ask about your prior authorization approval rates, because you don’t want unnecessary burdens on patients trying to access drugs — but if you’re approving, say, 95% of specialty drug requests, the question is whether there’s a reason to have a prior authorization on that drug at all. And if there is a reason, why aren’t we having more rigorous review? We need to start asking questions based on data. There are so many anecdotes out there about how these things work, but once we start putting it through the data test, we’re going to start seeing how this is really hurting the patient, because the costs are just so high.

Biosimilar dispensing rates fell more than 40% between 2024 and 2025, according to data from the Association for Accessible Medicines (AAM) — a surprising reversal for drugs that were supposed to be pharmacy benefits’ biggest cost-saving story. Instead of migrating from brand-name biologics like Humira and Stelara to their lower-cost biosimilar counterparts, patients are increasingly being steered toward newer branded competitors such as Skyrizi, Rinvoq and Tremfya, even though biosimilars can cost roughly $600 a month compared with $6,000 for branded alternatives.