Biosimilars can significantly reduce employer pharmacy costs. Are you missing out?

With pharmacy costs accounting for almost 25% of total health care expenses, it’s no surprise drug prices are top of mind for employers.¹ Specialty drugs are a major contributor, with businesses paying an extra $38,000 per year for each employee who needs them.²

Biologics are a class of specialty drugs that treat chronic conditions like cancer, diabetes, rheumatoid arthritis, multiple sclerosis, and Crohn’s disease. They’re also incredibly expensive. To put that into perspective, the U.S. spent $568 billion on pharmaceuticals in 2021 — and $260 billion went toward biologics.³ And while biologics make up nearly half of the nation’s annual drug spend, they represent a mere 2% of all prescriptions. However, there are safe, effective, and more affordable alternatives to biologics: Biosimilars.

Biosimilars are the future of specialty drug therapy

Biosimilar medications are safe, effective, and closely mimic the biologics they’re based on. The Food and Drug Administration (FDA) ensures that all biosimilars undergo rigorous reviews and approvals before going to market. “Biosimilars are not identical to biologics, so there’s a perception that they won’t work as well,” explains David M. Chen, Kaiser Permanente’s director of Drug Use Management. “But clinical studies and real-world trials have proven that biosimilars are just as safe and effective as brand biologics.”

Biosimilars are more affordable — and driving down biologic costs

On average, biosimilars cost 50% less than their biologic reference products.⁶ Biosimilars are also driving down biologic costs by creating competition — with the average price of brand biologics falling 25% after biosimilar launch.⁷ “If biosimilars were more widely adopted, the cost of health care wouldn’t rise so rapidly,” Chen says.

Why are biosimilars dramatically underutilized?

Adoption is disincentivized

Biosimilar adoption is higher in settings where prescribers are incentivized for improving quality while lowering costs, such as value-based care organizations. Unfortunately, prescribers outside these systems have been slow to adopt biosimilars and many health plans make biosimilars difficult to access because they’re financially disincentivized. A 2023 study showed that biosimilars are covered more restrictively than biologics about 20% of the time — and plans are more likely to restrict coverage on biosimilars that treat the most common conditions.¹²

Pharmacy benefit managers (PBMs) often use their bargaining power to negotiate discounts or rebates from biologics manufacturers, thereby disincentivizing adoption of biosimilars. It’s a complicated financial system driving profits for drug companies — with businesses, consumers, and health care organizations ultimately paying the price.

Prescribers need accurate information

Currently, it can be difficult to access unbiased information about biosimilars. Former FDA Commissioner Scott Gottlieb expressed concerns about, “either deliberate or unintentional efforts by branded companies to create confusion” around the safety of biosimilar drugs.¹³ But when prescribers understand the facts about biosimilars — and are not incentivized to stick with biologics — adoption increases exponentially.

How employers can reap the cost-saving benefits of biosimilars now

Employers who want to fully optimize cost savings from biosimilars must actively engage in the benefits design process. “Employees with chronic conditions need access to more affordable medications — like biosimilars. Employers can absolutely help make that happen,” Chen says.

3 ways employers can help drive biosimilar adoption forward

One solution is to choose a health plan with a history of embracing and encouraging biosimilar adoption, who can demonstrate how that approach saves their customers money. There are also things you can do to influence your current health plan in a positive direction.

1. Understand your health plan’s biosimilar strategy. Are they set up to make biosimilar adoption easy and seamless, or are they creating barriers?
2. Identify potential savings. Ask your health plan to run anonymous reports to see how many employees might be candidates for biosimilars and help evaluate the potential savings.
3. Take control of the formulary. Request the adoption of a biosimilar preferred formulary — or create a custom/carved-out formulary that is not rebate-driven.

The future of biosimilars

As more biosimilars reach the market, they’ll increase competition and continue to drive down prices — making essential drug therapies more accessible and affordable.

“Diabetes is so prevalent, and the cost of insulin has always been a barrier to people managing their symptoms,” says Chen. “If we have more accessibility because insulin biosimilars are more affordable, adherence will go up, and employees will get healthier.”

New interchangeables will remove red tape and automate biosimilar adoption

When a biosimilar is interchangeable, it means pharmacists can swap a more affordable biosimilar for a biologic without consulting the prescriber. Sound familiar? It’s the same as a pharmacist substituting a generic medicine for a branded drug when filling a prescription. However, only a handful of biosimilars are currently approved as interchangeable in the U.S. So it will take time for policy to catch up with science. As more biosimilars become interchangeable, employees with chronic conditions will have one less barrier to more affordable drugs that can keep them healthier and more productive at work.

Employers play a key role in unlocking the full potential of biosimilars

Biosimilars offer much-needed alternatives to the expensive biologics that have made accessing essential drug therapies difficult for employees and expensive for businesses. But employers can help reverse the trend of underutilization and get these life-changing drugs into more employees’ hands — improving workforce health, productivity, and engagement while driving overall health care costs down.