Biosimilars Could Save Taxpayers Billions

A recent analysis conducted by Pacific Research Institute and Wayne Winegarden, PhD, found that if biosimilars reached 75% market share, the federal government would save $7 billion annually, state Medicaid programs would save $1.2 billion annually, and commercial payers would save $3.3 billion annually.

For the study, Winegarden analyzed the savings potential of biosimilars using recent price and volume data. The pricing data were based on national average sales price points from July 2019 through September 2019 and on expenditures-per-unit data from the Centers for Medicare and Medicaid Services (CMS). Volume data came from 12-month sales-volume numbers through February 2019 as repored by IQVIA. However, the volume data was not distinguished among expenditures for Medicare, Medicaid, and the commercial market, so the expenditure breakdown by payer is estimated.

For those estimations, Winegarden relied on GAO studies and Medicare’s share of insured population within each state to estimate Medicare information. Commercial market volumes for each state were estimated based on commercial-coverage rates, and Medicaid volumes were estimated based on coverage rates.

Then, savings estimates were evaluated for the current market and for hypothetical scenarios. One hypothetical scenario had biosimilars growing by 25%, another had them growing by 50% and the third had them growing by 75%. Currently, biosimilars save the United States health care system over $240 million annually, with state Medicaid programs saving $47.5 million, and commercial payers saving $136.8 million.

However, it follows that if those are the savings based on the current biosimilar market, savings will be significantly increased if biosimilars garners a greater share of the market. Winegardne concluded that “if biosimilars obtained a 25%, 50%, and 75% market share, then total systemic savings could equal $2.4 billion, $4.7 billion, and $7.0 billion annually,” respectively. By the same logic, State Medicaid programs would save $417 million, $802 million, and $1.2 billion, respectively, and commercial payers could save $1.2 billion, $2.2 billion, and $3.3 billion, respectively.

Winegarden suggests that employers and the government have incentives and should work together to change policy and “correct currently ineffective regulatory policies, promote greater education of the benefits that biosimilars offers, and eliminate adverse market incentives that discourage biosimilar use.” He uses the example of eliminating rebate contracting, or if it cannot be eliminated entirely, 100% of the savings should be passed through to the patients. “Eliminating obstructions that are preventing the healthcare system from realizing the savings potential of biosimilars would increase the accessibility of high-quality, affordable treatment for patients,” he says.

Congress has already introduced several bipartisan proposals in the House and Senate aimed at increasing access to (and use of) biosimilars.

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