Surabhi Dangi-Garimella, Ph.D.
Despite biosimilars being around for a while, utilization in the U.S. has not caught on. Several studies have shown the cost benefit of replacing originator or reference products with biosimilars; however, contracts between drug manufacturers and health plans/pharmacy benefit managers, coupled with skepticism about the efficacy of these products have raised barriers to their use.
The U.S. has significantly lagged behind Europe—biosimilar adoption by EU nations has created a path for significant savings for individual health care systems. According to a recent report by IQVIA, the volume of biosimilar prescription and use by EU nations in 2020 led to record list-price savings: €5.7 billion. Now, the Office of the Inspector General (OIG) has advice for CMS: monitor biosimilar use and tiering in plan formularies to avail savings for both, Medicare Part D and beneficiaries.
To take a deeper dive into biologics and biosimilars, and to understand terms such as ‘originator’, ‘reference’, and ‘interchangeability’, read our e-book.
What Did the OIG Study Find?
- The OIG study evaluated the impact on Medicare Part D spend if biologics currently covered under Part D, which are estimated to cost Medicare $12 billion annually, were replaced with approved biosimilars.
Study time period: 2015-2019
Key Findings:
- Despite the availability of biosimilars, higher-cost reference products were prescribed 5-times more than biosimilars.
- In 2019, biosimilar utilization between 60-90% could have slashed:
- Medicare Part D spending by 18% ($84 million) to 31% ($143 million), respectively
- Medicare enrollees’ out-of-pocket costs by 12% ($1.8 million) and 22% ($3.1 million), respectively
- Individual savings would of course vary, based on the person’s Part D spending structure, the phase in their benefit when they filled the prescription (e.g., initial versus catastrophic phase), and the type of drug
- Part D formularies need to open up coverage for biosimilars. Not all plan formularies covered biosimilars in 2019.
- Even if they were covered, reference products were placed on a preferred tier compared to the biosimilar
- This may be the result of contracts drawn between health plans and manufacturers that give plans big rebates on drug price to ensure exclusive coverage or preferred placement in the formulary, thereby maintaining their market share
- Multiple biosimilars for Humira (2023) and Enbrel (2029) are anticipated to hit the market and their use can significantly curtail Medicare’s spending
- Both drugs have an indication for use in arthritis, which is a very common condition among our senior, Medicare-eligible populations
- The two drugs together accounted for over $5.7 billion in Medicare Part D spending and over $70 million in beneficiary spending in 2019
- With seven biosimilars for Humira—one of which is interchangeable, meaning it can be substituted by a pharmacist at the counter without consulting the prescriber—there could be a bigger impact on the market and prices could be substantially lower
OIG’s recommendations:
- CMS should encourage Part D plan managers to increase access to and utilize biosimilars
- CMS should monitor biosimilar coverage on formularies
Surabhi Dangi-Garimella, Ph.D. is a biologist with academic research experience, who brings her skills and knowledge to the health care communications world. She provides writing and strategic support to non-profit groups via her consultancy, SDG AdvoHealth, LLC.
