Pharmacy costs continue to be a significant portion of total health care spend. Specialty drugs, in particular, are driving these costs with a projected annual growth rate of 8% through 2025. Biosimilars may help us shift these trends downward.¹

While only 1-2% of members are typically on specialty drugs, they now account for, on average, over 50% of most employers’ total pharmacy spend.² Specialty drugs will continue to drive this narrative with new drugs in the pipeline, population expansion for specialty treatments and price increases. Biosimilars―“generic-like,” highly similar versions of their referenced branded specialty drug―have been slow to market. They are now making their way into the market with numbers we have yet to see.

Perhaps the most impactful example is Humira, the number one drug in the U.S., with sales in 2020 totaling $16B. Multiple biosimilars for Humira will enter the market in 2023 and compete for their share of utilization—creating one of the most significant disruptions the pharmacy space has witnessed in many years.

While the advent of competition is an exciting and much-welcomed opportunity to potentially yield notable cost relief, many factors will influence how biosimilars in the pipeline will impact costs in both the shorter- and longer-term. Here are a few considerations to keep in mind:

• Clinical Indications. Will biosimilars have the same list of clinical indications approved for their referenced branded specialty product?
• Will biosimilars offer the same strength, dose and formulations as their referenced branded specialty product?
• Rebate Options. Will referenced branded specialty product manufacturers offer greater rebates to achieve a more favorable net cost compared to biosimilars? It’s possible that biosimilars will NOT become the lowest cost option in the short- or long-term.
• Formulary Placement. Will biosimilars be covered along with their referenced branded specialty product, either sharing preferred formulary status or alternating preferred/non-preferred tier placement to optimize cost-effective formulary options?
• Clinical Acceptance. Will biosimilars gain further acceptance from the physician community with the increased availability of real-world data to build desired treatment confidence, including the biosimilar’s efficacy, safety and side effect profile?
• Specialty Programs. Will biosimilars interrupt financial assistance for specialty copay programs as the referenced branded manufacturer considers rolling back or terminating available financial dollars for their drug?

Employers should meet with their Pharmacy Benefit Manager (PBM) to review their formulary strategy and approach to managing biosimilars. Today, many PBMs are watching and waiting to see what happens in the market. Ultimately, the PBMs will determine the formulary placement of biosimilars and their referenced branded specialty products—and it’s important to understand how these options may impact your plan and membership.

[1] https://www.pharmacytimes.com/view/outlook-for-health-system-based-specialty-pharmacy-in-2022-and-beyond

[1] https://www.evernorth.com/articles/specialty-drug-trends-and-utilization

Andrea Grande R.Ph.

Principal, Brown & Brown