The term “biosimilars” has been in the news a lot lately, not just in terms of the benefits they can provide, but also regarding their role in helping to reduce drug costs.
What are biosimilars?
According to a recent report by the RAND Corporation, they are "biosimilar versions of complex biologic drugs used to treat illnesses such as cancer and rheumatoid arthritis."
“Biologics are complex, protein-based drugs manufactured in living systems and include insulin, monoclonal antibodies to block inflammation in rheumatoid arthritis, and a range of drugs to treat cancer, multiple sclerosis and other serious diseases,” notes the RAND report.
Alex Brill of Matrix Global Advisors writes in a recent paper that, “Biosimilars are less expensive copies of these highly complex pharmaceuticals” that are just beginning to enter the U.S. market.
How can they reduce costs?
Brill’s paper notes that “Biologics are among the most expensive drugs available and represent a large and increasing share of U.S. drug spending.”
According to the RAND report, “While biologics are important treatments for many conditions, they often are expensive and patient copays for the treatments can be several thousand dollars per year.
“While 1 percent to 2 percent of the nation’s population is treated with a biologic each year, the drugs accounted for 38 percent of prescription drug spending in 2015,” continues the report. “In addition, biologics accounted for 70 percent of the growth in prescription drug spending in the U.S. between 2010 and 2015.”
Biosimilar medicines offer the potential to improve the cost-effectiveness of medicines by driving competition with the higher-cost biologic drugs.
How much can they save?
RAND finds that increased introduction of biosimilars could cut U.S. health care spending by $54 billion over the next decade.
“Biologics account for the fastest-growing segment of prescription drug spending, but biosimilars have the potential to help slow some of the increase,” said Andrew Mulcahy, lead author of the study and a policy researcher at RAND.
Brill agrees about the cost-saving potential of biosimilars and notes in his report that the key is providing incentives for physicians to prescribe biosimilars could increase utilization and reduce costs.
Increasing competition to reduce drug costs: Biosimilars are one option moving forward.