Christine Johnston on why biosimilars are losing formulary ground

Biosimilar versions of Humira and Stelara arrived in 2023 and 2024, promising major savings for payers. But much of that early uptake has since shifted toward newer branded alternatives such as Skyrizi, Rinvoq, and Tremfya, according to Christine Johnston, president and co-founder of Foundational Pharmacy Strategies. The reason, she said, has less to do with clinical performance than with how pharmacy benefit managers are paid.

Manufacturers of the newer brand-name drugs have run head-to-head trials against legacy products like Humira, and many pharmacy benefit managers (PBMs) have responded by favoring those newer drugs over biosimilars. Johnston said the real-world clinical difference is modest at best, sometimes amounting to a more convenient dosing form rather than meaningfully better outcomes, while the cost gap is substantial: According to Johnston, a biosimilar can run around $600 a month compared with roughly $6,000 for a branded competitor.

That gap persists, Johnston said, because rebates are typically calculated as a percentage of wholesale acquisition cost, but the list price does not reflect what is actually paid after discounts. A higher list price generates a larger rebate, and manufacturers often structure deals so that a PBM must keep several of the manufacturer's products on formulary, including the older brand, to continue receiving rebates on the newer ones. Johnston noted that the three largest PBMs control about 80% of the prescriptions dispensed in the United States and that those same companies typically set formulary placement, administer prior authorization criteria, and dispense the drugs through their own specialty pharmacies, which she said can account for roughly 35% of their revenue.

In this interview with Managed Healthcare Executive^®, Johnston discusses how that rebate structure discourages biosimilar adoption and why most employers are not positioned to counteract it. Employers, she said, generally lack the clinical expertise or contractual leverage to decide independently which drugs belong on formulary, leaving that decision to the PBM they've contracted with even when a lower-cost, clinically comparable option is available.