How Biosimilar Medications are Shaping Employer Healthcare Costs
January 2, 2024
Explore the potential of biosimilars and how these FDA-approved alternatives can relieve financial pressure and create sustainable healthcare strategies for employers.
Explore the potential of biosimilars and how these FDA-approved alternatives can relieve financial pressure and create sustainable healthcare strategies for employers.
Biosimilars are being introduced as alternatives to biologics. With rising healthcare costs continuing to impact employers, including the popularity of weight loss drugs and other specialty drug pricing, biosimilars can offer cost savings and increase employee access to necessary medicines.
Although this new alternative can help mitigate rising costs, employers need to understand how these drugs work and their impact on healthcare costs before considering them for their own health plans.
Biosimilar drugs are a biological product produced from living organisms – humans, animals or microorganisms. Unlike generic drugs, they are not identical to their reference biological products (the brand-name counterpart) and aren’t created from synthesized chemicals.
Approved by the Food and Drug Administration (FDA), biosimilars are like the reference drug (a previously FDA-approved biologic) but have no significant clinical differences. Compared with biologics, biosimilars have the same strength, dosage and potential side effects as their biologic counterparts but provide the same treatment benefits.
The FDA rigorously evaluates biosimilars to validate their efficacy, safety and quality. The FDA currently has approved over 40 biosimilars; however, not all are commercially available. Biosimilars have been deemed as safe and effective treatment options for many illnesses, including chronic skin and bowel diseases, arthritis, kidney conditions and cancer. They can potentially increase access to lifesaving medications at a lower cost.
Employers are seeing an increase in out-of-pocket expenditures for medications that employees and their families depend on as prescription drug costs continue to rise. Biologics and other specialty drugs are the fastest-growing part of these drug costs.
By 2025 the Biosimilars Council estimates that 1.2 million people will have access to more affordable biologic medicines. This is due to the availability of several leading biosimilars.
The exclusivity period for the following drugs either has ended or will expire before 2025, which will open the door for additional biosimilar approval:
Out of the seven products listed, five are top-selling drugs in the country, contributing to over 30% of total biologic sales in the US.
Continued research shows that biosimilars have the potential to benefit older adults, women and low-income individuals most. Examining the utilization demographics of these specific products shows that 86% of patients are above the age of 40, approximately 67% are women and around 42% belong to the lower-income category.
According to research, large and self-insured employers stand to benefit the most from biosimilars. The ERISA Industry Committee (ERIC) reported that in 2018, self-insured employers in the US could have saved up to $1.4 billion by promoting the use of biosimilars in their health plans.
Additionally, ERIC’s research revealed that patients who opted for biosimilar medicines paid an average of 12% (around $300) and 45% (around $600) less out of pocket compared to those who chose biologic drugs. These findings highlight the potential cost savings and improved affordability that is associated with biosimilars.
Biosimilars are projected to save the national healthcare system up to $133 billion by 2025, according to the Biosimilars Council. An increasing number of employers are considering biosimilars as a more viable solution to reduce healthcare expenses. By incorporating biosimilars, employers can not only potentially lower specialty drug costs, but enhance health outcomes for employees and their families.
Specialty drug costs are largely attributed to biologics and are typically cited as the leading driver of rising prescription drug costs. With the growing potential of biosimilars, employers may increasingly explore their promotion to achieve cost savings in their health plans. By providing more affordable alternatives for their employees, employers can not only enhance the overall quality of care for employees but also ensure better value for their money.
To learn more about biosimilars and healthcare cost mitigation trends, reach out to myself or a trusted advisor.
