The Biosimilars Landscape Through the Eyes of an Economist

James D. Chambers, PhD, MPharm, MSc, is a health economist by trade. After earning his MSc in Health Economics from the University of York and his doctorate in that same focus with Brunel University’s Health Economic Research Group, he has gone on to pursue various endeavors along that track, most recently as a professor of medicine at the Tufts Medical Center Institute for Clinical Research and Health Policy Studies and a health economist spokesperson for Organon.

He sat down with Pharmaceutical Commerce to uncover the latest regarding biosimilars—biologic medical products that are considering highly similar to their reference products—to lay out how in fact they can lead to cost reductions, while boosting patient access; their economic impact; challenges to implementation and recommendations for faster implementation; and emerging trends in the sector.

Pharma Commerce: Could you elaborate on how biosimilars have the potential to reduce healthcare costs and increase patient access to treatments? What are the key factors driving these outcomes?

Chambers: Biosimilars have the potential to reduce healthcare costs and increase patient access to essential treatments by offering more affordable alternatives to expensive biologics. Since 2014, biologics have made up 37% of net drug spending, totaling $120 billion,1 highlighting the need for cost-effective options. Globally, biosimilars have demonstrated success, particularly in Europe, where they provide 20% of treatment volume and drive savings from reduced list and net prices of the referenced medicines. In the US, biosimilars are projected to save the healthcare system $38.4 billion from 2021 to 2025,2 and have already provided more than 344 million additional days of therapy, expanding treatment access.

PC: You mentioned that there are economic dimensions of biosimilars that are often less explored. Could you share some of the crucial economic factors that should be considered when assessing the full impact of biosimilars on the healthcare system?

Chambers: Biosimilars introduce significant economic value, particularly by increasing competition in the biologic drug market. This competition drives down prices, undercutting reference product prices, thereby potentially reducing overall treatment costs and expanding patient access. By providing lower-cost alternatives to reference biologics, biosimilars also push reference biologic manufacturers to adjust their pricing strategies.

As biosimilars gain more market share, they reshape payer and provider decisions, leading to improved formulary coverage and promoting more cost-effective treatment options. This shifting market landscape underscores the potential of biosimilars to generate both direct savings and broader economic benefits, ultimately enhancing affordability and accessibility across the healthcare system.

PC: Despite the potential benefits, biosimilars face barriers to adoption. What are the most significant challenges preventing their widespread use, and how can these be addressed at both the policy and market levels?

Chambers: A major barrier to the adoption of biosimilars in the US is the variation in coverage policies across commercial health plans. My team’s 2019 study, using the Tufts Medical Center Specialty Drug Evidence and Coverage (SPEC) Database—which includes specialty-drug coverage decisions from 17 of the largest US commercial health plans that make their decisions publicly available (covering 60% of commercially covered lives)—found that plans covered biosimilars as “preferred” in only 14% of decisions.3 More recently, a 2023 study revealed that 19.4% of biosimilar coverage decisions were more restrictive than those for their reference products.4 These restrictions are often due to rebate walls, where reference biologic manufacturers offer significant rebates to payers, making it harder for biosimilars to compete for formulary inclusion.

Another major barrier is the lack of education and familiarity with biosimilars among healthcare providers. Many physicians remain hesitant to prescribe biosimilars despite strong evidence supporting their safety and efficacy. Addressing these challenges requires stronger educational initiatives targeting both healthcare professionals and patients. Additionally, greater alignment of policies across stakeholders—such as payers, PBMs, and providers—will help reduce coverage inconsistencies and foster broader biosimilar adoption.

PC: In your work with the Specialty Drug Evidence and Coverage (SPEC) Database, have you identified any emerging trends or patterns that suggest biosimilars will become a more integral part of healthcare in the near future?

Chambers: In 2024, using the Specialty Drug Evidence and Coverage (SPEC) database, my team analyzed coverage, market share, and pricing data for seven originator products and 20 corresponding biosimilars. The analysis found that preferred coverage of multiple products increased from 30% to 76% between August 2017 and August 2022, signaling growing acceptance by health plans.

This shift indicates the increasing role of biosimilars in healthcare as healthcare plans recognize their potential for cost savings and expanding patient access. The market dynamics around biosimilars are also evolving. For instance, biosimilars with list-price savings (relative to reference products) of $15,000 or more per patient per year were less likely to be restricted in coverage, demonstrating that cost-effectiveness influences payer decision-making. Furthermore, the introduction of biosimilars in therapeutic areas like oncology and rheumatology is intensifying competition in markets traditionally dominated by high-cost biologics. As these trends continue, we anticipate that biosimilars will become more widely integrated into treatment regimens.

PC: From a health economics perspective, what strategies or interventions would you recommend in order to incentivize faster adoption of biosimilars, particularly in markets where they are still struggling to gain traction?

Chambers: To accelerate biosimilar adoption, a multifaceted strategy incorporating policy adjustments, education, and market dynamics is essential. A key intervention is adjusting coverage policies to better align with cost savings.

Although research indicates that biosimilars offering significant list-price reductions face fewer coverage restrictions, health plans may impose stricter policies in high-prevalence disease areas where they have negotiated favorable pricing for reference products. Reducing coverage restrictions on biosimilars with the highest cost savings could improve accessibility and drive wider adoption, particularly for conditions with high treatment costs.

Education for healthcare providers and patients is also crucial. It’s key to raise awareness of data and real-world evidence (where it exists) of biosimilars to address and correct potential misconceptions and build confidence in their use. This is why I am collaborating with Organon, a company with a commitment to biosimilars, to share insights and contribute to broader industry conversations, as fostering collaboration among key stakeholders, including payers, providers, policymakers, and industry leaders is crucial for creating a unified approach.

References

1. Yu T, Jin S, Li C, Chambers JD, Hlávka JP. Factors Associated with Biosimilar Exclusions and Step Therapy Restrictions Among US Commercial Health Plans. BioDrugs. 2023 Jul;37(4):531-540. doi: 10.1007/s40259-023-00593-7. Epub 2023 Apr 1. PMID: 37004706; PMCID: PMC10287773.

2. Mulcahy A, Buttorff C, Finegold K, El-Kilani Z, Oliver JF, Murphy S, Jessup A. Projected US savings from biosimilars, 2021-2025. Am J Manag Care. 2022 Jul;28(7):329-335. doi: 10.37765/ajmc.2022.88809. PMID: 35852882.

3. Chambers JD, Lai RC, Margaretos NM, Panzer AD, Cohen JT, Neumann PJ. Coverage for Biosimilars vs Reference Products Among US Commercial Health Plans. JAMA. 2020;323(19):1972–1973. doi:10.1001/jama.2020.2229

4. Yu, T., Jin, S., Li, C. et al. Factors Associated with Biosimilar Exclusions and Step Therapy Restrictions Among US Commercial Health Plans. BioDrugs 37, 531–540 (2023). https://doi.org/10.1007/s40259-023-00593-7