Biosimilar competition did not reduce out-of-pocket spending, study finds

Biosimilar competition did not lower out-of-pocket spending on biologics for commercially insured individuals, a study published in JAMA Health Forum found.

Prescription drug spending in the United States is higher than in any other country, surpassing $500 billion in 2021. High-cost biologics are often a contributor to these expenses. Policymakers established an abbreviated regulatory pathway for biosimilars to help address the steep costs of biologics. Biosimilars can enter the market after the original product’s market-exclusivity protection expires, providing price competition.

Biosimilar prices are generally 15 to 35 percent lower than the brand-name reference biologics and may prompt brand-name manufacturers to lower prices or offer discounts.

For many biologics, costs are reimbursed under medical insurance benefits instead of pharmaceutical benefits. Cost-sharing for prescription drugs varies by benefit design, and reimbursement rates negotiated between payers and providers vary. Thus, savings generated from biosimilar competition could lower premiums without reducing out-of-pocket costs.

Researchers used national commercial outpatient claims data from January 2009 to March 2022 to assess if biosimilar competition led to lower out-of-pocket costs and if out-of-pocket costs were lower for members using biosimilars. The study looked at seven biologics that faced biosimilar competition between November 2013 and July 2019: filgrastim, infliximab, pegfilgrastim, epoetin alfa, bevacizumab, rituximab, and trastuzumab.

There were 1.7 million claims from 190,364 individuals who used at least one of the seven biologics over the study period. The first analysis included 1.3 million claims from 145,389 individuals that occurred during the four years before and after biosimilar competition began for each drug, amounting to 251,566 patient-years.

Patients had non-zero annual out-of-pocket spending for 49 percent of the patient-years. There was a greater share of patients with non-zero out-of-pocket costs and higher mean out-of-pocket costs both before and after biosimilars entered the market, the study found.

The adjusted odds ratio of non-zero annual out-of-pocket spending in the second year after competition entered the market compared with the year before biosimilar availability was 1.08. In addition, mean non-zero annual spending was 12 percent higher.

Spending trends varied by drug; rituximab and trastuzumab—the two biologics with the most recent biosimilar competition—were the only drugs with significantly lower mean non-zero annual out-of-pocket spending two years after biosimilar entry. The other five drugs either had higher or non-significant changes in out-of-pocket spending.

The second analysis included 586,493 claims for 81,197 individuals who used any of the seven biologics after a biosimilar became available. A quarter of the claims were for a biosimilar, representing 28,352 individuals.

Overall, 28 percent of reference biologic claims and 17 percent of biosimilar claims had non-zero out-of-pocket costs. After adjusting for covariates such as age, sex, US Census region, health plan type, and service setting, biosimilar claims were more likely to have non-zero out-of-pocket costs than the reference biologic claims.

The mean out-of-pocket cost was $707 for biosimilars and $911 for biologics. Costs varied by drug, with filgrastim and rituximab having lower out-of-pocket costs for biosimilars and bevacizumab having higher costs for its biosimilar.

These varying trends indicate that biosimilar competition has not consistently reduced patient out-of-pocket costs. Policymakers should focus on regulations that ensure biosimilar competition translates into better affordability and access for individuals who rely on these medications. Constraining out-of-pocket costs for biosimilars or ensuring that patient cost-sharing is not tied to reimbursement rates that exceed prices may help achieve this goal.