Biosimilars and Cost Saving: Will Interchangeable Biosimilars Do to Biologics What Generic Drugs Did to Brand Name Medications?

Merton Lee
Ilene Harris
Woman injecting herself with insulin

New, protein-based medications called biologics offer patients safe, highly effective treatments for challenging conditions, including COVID-19. However, biologics are some of the most expensive medications on the market, and many people face barriers to these newer medications’ therapeutic promises.

Although biologics are used by less than 2% of the population, they cost Medicare Part D and its beneficiaries approximately $12 billion in 2019. These costs are likely to grow as new biologics come on the market for chronic conditions prevalent in the Medicare population.

In the United States, a unique regulatory environment and health system could be hindering the broader use of biologics, though various initiatives are underway to attempt to address these access and cost concerns.

In this brief, we discuss the introduction of interchangeable biosimilars, a generic form of biologics, as well as efforts to encourage their use, particularly in the Medicare program.

Key Points

  • Biologics, such as insulin and novel protein-based medications, have therapeutic advantages over conventional drugs but are among the highest cost medications on the market.
  • Through a new regulatory pathway, a “generic” version of biological drugs, known as interchangeable biosimilars, are now coming to market.
  • The Inflation Reduction Act (2022) aims to lower the price of biologics primarily by promoting biosimilars.
  • Additional approaches to advancing biosimilar use and improving access are being tested, both in payment structures and regulation, as more interchangeable biosimilars are set to become available.
Headshot of Dr. Rajakannan
Senior Researcher