Biosimilars’ savings could be lower than predicted

Sep 15, 2015

While biosimilars’ savings will not reach the historically high level achieved for small-molecule generic drugs, the impact on the healthcare industry will still be significant, according to a new report.

While biosimilars’ savings will not reach the historically high level achieved for small-molecule generic drugs, the impact on the healthcare industry will still be significant, according to a new report.

Related: 5 reasons to be concerned over proposed Medicare rule on biosimilar coding

“Unlike traditional generic drugs, it is expected that the relatively low discounts and high-investment cost expected with biosimilars will create competition between biosimilars and brand-name biologic drugs that is more similar to competition between brands than between a brand and a generic,” wrote Conor Ryan, author of the American Action Forum report and an outside health expert for the AAF.

By analyzing several different scenarios, the AAF estimates that biosimilars could save the US healthcare industry between $5.1 billion and $37.8 billion in drug expenditures from 2015 through 2024.

Conversely, some industry sources estimate $250 billion in savings over the next 10 years, while the Congressional Budget Office estimates a 10-year savings of around $25 billion.

The AAF’s savings estimate may be lower because the organization takes into account whether physicians and pharmacists will actually recommend biosimilars to patients-along with the discounts biosimilars’ manufacturers may be able to offer.

Related:Sandoz touts value of first biosimilar for cancer

“Currently, generic drugs account for 86% of all prescriptions, which has led to large savings and increased access to small-molecule prescription drugs. But the success of generic drugs has depended on the confidence of physicians, pharmacists, patients, and payers that those drugs were substitutable,” Ryan wrote. “In contrast, there is research to suggest that substitution between biosimilars and reference biologics may have unintended impacts on patients and clinical outcomes.”

Because physicians understand the uncertainty surrounding biosimilar treatments, they may hesitate to substitute away from a successful biologic treatment in exchange for modest savings, the report stated. In a recent study by the Biotrends Research Group, 86 percent of rheumatology and gastroenterology physicians surveyed indicate they would prevent biosimilar substitution for some, if not all, prescribed biologic medicines, AAF found.

AAF’s low-end estimate of $5.1 billion in savings could occur if FDA places significant requirements on biosimilar manufacturers to perform independent clinical trials to support claims of similarity. “Such regulations would increase the fixed costs of developing biosimilars and likely reduce the discount that a manufacturer would be able to offer relative to the reference product,” Ryan wrote.

Read next: Biosimilars' naming proposal could cause "significant" changes

x