Key Takeaways
- Biosimilars are FDA-approved biological drugs that are highly similar to — and have no clinically meaningful differences from — an existing reference biologic.
- Biologics are the fastest-growing and most expensive drug category for employer health plans; biosimilars offer savings of 20 to 50% versus the reference product.
- PBM rebate contracts often create financial incentives to keep members on high-cost reference biologics rather than switching to lower-cost biosimilars.
- Employers must actively manage biosimilar adoption — it does not happen automatically through standard formulary management.
- The biosimilar pipeline is robust: over 40 biosimilars are now FDA-approved, with dozens more in development for the highest-cost specialty drugs.
What Are Biosimilars?
Biological drugs — biologics — are complex medicines derived from living cells. They include treatments for rheumatoid arthritis, cancer, inflammatory bowel disease, psoriasis, and diabetes. Because they are derived from living organisms, they cannot be exactly replicated the way small-molecule generic drugs can. A biosimilar is a biological drug that has been demonstrated to be highly similar to an already-approved reference biologic, with no clinically meaningful differences in safety, purity, or potency.
The FDA approval pathway for biosimilars is rigorous — requiring extensive analytical, clinical, and pharmacokinetic data demonstrating biosimilarity. An FDA-approved biosimilar is not a "generic" in the traditional sense, but it is a clinically equivalent, lower-cost alternative to the reference product.
Biologics represent roughly 2% of all prescriptions but 40 to 50% of total drug spend for employer health plans. The top 10 biologics by employer spend — including Humira, Enbrel, Stelara, Keytruda, and Ozempic — account for a disproportionate share of pharmacy costs. Biosimilars for these drugs represent the single largest pharmacy cost-containment opportunity available.
The Humira Case Study
Humira (adalimumab) is the best-selling drug in history and the most common biologic on employer health plans. It treats rheumatoid arthritis, psoriasis, Crohn's disease, and other inflammatory conditions. Its list price exceeds $80,000 per year. In 2023, multiple biosimilars entered the US market — offering the same clinical efficacy at 20 to 85% lower list price.
- As of 2024, over 10 FDA-approved Humira biosimilars are available in the US market.
- List prices for Humira biosimilars range from $1,300 to $5,000 per month versus $6,500 to $7,000 per month for reference Humira.
- Employers with 100 members on Humira could save $2 to $5 million annually by transitioning to biosimilars.
- Despite this, many employer plans have seen slow biosimilar adoption — driven by PBM rebate contracts that favor reference Humira.
The Humira rebate problem: AbbVie (Humira's manufacturer) pays PBMs very large rebates to keep Humira preferred on formularies — even as biosimilars enter the market at dramatically lower prices. A PBM that retains a share of these rebates has a financial incentive to keep members on Humira rather than transitioning them to biosimilars. This is the rebate conflict of interest in its most expensive form.
The Biosimilar Opportunity by Drug Category
The biosimilar pipeline covers the highest-cost biologic categories. Employers should monitor FDA approvals and market entry for these drugs.
| Reference Biologic | Condition | Biosimilars Available | Estimated Savings |
|---|---|---|---|
| Humira (adalimumab) | RA, psoriasis, Crohn's | 10+ approved | 20–85% |
| Enbrel (etanercept) | RA, psoriasis | 2+ approved | 20–40% |
| Stelara (ustekinumab) | Psoriasis, Crohn's | 2+ approved | 30–50% |
| Remicade (infliximab) | RA, Crohn's, UC | 6+ approved | 30–50% |
| Neulasta (pegfilgrastim) | Chemotherapy support | 5+ approved | 30–50% |
| Lantus (insulin glargine) | Diabetes | 3+ approved | 20–40% |
Driving Biosimilar Adoption
Biosimilar adoption does not happen automatically. Employers must actively manage the transition through formulary design, member communication, and prescriber engagement.
- Formulary positioning: Place biosimilars on the preferred tier with lower cost-sharing than the reference biologic. Make the biosimilar the path of least resistance.
- Step therapy: Require new patients to try a biosimilar before the reference biologic is covered — with appropriate clinical exceptions.
- Non-medical switching: For stable patients already on a reference biologic, implement a managed transition program with clinical oversight and member communication.
- Prescriber engagement: Educate prescribers about biosimilar equivalence and formulary positioning. Many prescribers default to the reference product out of habit.
- Member communication: Explain to members that biosimilars are FDA-approved, clinically equivalent, and will reduce their out-of-pocket costs.
The most effective biosimilar programs combine formulary positioning with a dedicated transition management vendor. These vendors handle prescriber outreach, prior authorization management, and member communication — taking the administrative burden off the employer and TPA.
Interchangeable Biosimilars
The FDA designates some biosimilars as "interchangeable" — meaning a pharmacist can substitute the biosimilar for the reference product without a new prescription from the prescriber, subject to state pharmacy laws. Interchangeable designation simplifies the transition process and reduces the need for prescriber engagement.
- Interchangeable biosimilars have met a higher standard of evidence demonstrating that switching between the biosimilar and reference product does not produce greater risk than continued use of the reference product.
- As of 2024, several biosimilars have received interchangeable designation, including multiple insulin biosimilars and Hadlima (adalimumab biosimilar).
- State pharmacy laws govern whether pharmacists can substitute interchangeable biosimilars — most states now permit substitution with patient notification.
- Interchangeable designation does not eliminate the need for formulary management — PBM rebate contracts may still create incentives against substitution.
Your Action Steps
- 1Pull your specialty drug claims and identify which members are on reference biologics that have FDA-approved biosimilar alternatives.
- 2Calculate the potential savings from transitioning those members to biosimilars at current market prices.
- 3Review your formulary to confirm biosimilars are positioned on the preferred tier with lower cost-sharing than reference biologics.
- 4Ask your PBM whether your current rebate contract creates any financial incentive to keep members on reference biologics rather than biosimilars.
- 5Evaluate biosimilar transition management vendors for your highest-cost biologic categories.
- 6Implement step therapy for new biologic prescriptions — requiring biosimilar trial before reference biologic coverage for appropriate conditions.
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