Biosimilars continue to drive market competition and increase savings for seniors

Earlier this year, the Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) released a report on the impact of the biosimilar market on drug prices for Medicare Part B. The data revealed that after biosimilar competition was introduced, both reference product and biosimilar prices fell. OIG presented their findings by individual brand reference product with competing biosimilars. A new issue brief from Cencora provides additional insight into the OIG report on the aggregate level, underscoring the important role biosimilars play in lowering overall prices and costs for the Medicare Part B program and its beneficiaries.

Here's what you should know:

There continues to be a robust market for biosimilars. Biosimilars are exactly as their name implies, a medicine that is highly similar to an existing biologic medicine (known as a reference product) and has no clinically meaningful differences from that reference product. The first biosimilar was approved by the U.S. Food and Drug Administration (FDA) in 2015. Today, the agency has approved more than 40 biosimilars, establishing a robust market that yields increased competition and substantial savings for patients and the government.

The introduction of biosimilars has lowered costs for biologics in Part B. The Cencora issue brief found that:

• The introduction of biosimilars decreased the average sales price (ASP) for seven reference products with biosimilar competition by an average of 26% by the end of 2021.
• The introduction of biosimilar competition in Medicare Part B correlated to a cumulative 41% average drop in ASP from 2015 to 2021 for reference products with competing biosimilars.
• By 2022, the average use rate for biosimilars was 56%, meaning biosimilars represented a majority of utilization among products with biosimilar competition.

Price-setting provisions in the Inflation Reduction Act (IRA) threaten the biosimilars market. Cencora's analysis makes clear that the biosimilar market is increasingly a driver of competition and savings in Medicare Part B. Unfortunately, the IRA's price-setting framework jeopardizes this progress by discouraging biosimilar development. This is because the IRA ultimately fails to provide biosimilar companies with the stability and assurances they need to ensure they will not be forced to compete with a medicine that is already subject to government price setting. Due to this uncertainty and the high costs of biosimilar development, the law reduces incentives to invest resources toward the development of these types of treatments.

The U.S. biosimilars market has demonstrated its ability to lower drug costs for patients and Medicare through robust market competition. To continue realizing these benefits, it's critical that policymakers reduce barriers to the uptake of biosimilars and continue to foster a competitive biologics and biosimilars marketplace.