If you are taking a specialty biologic drug, or providing insurance coverage for it, you have probably heard the term “biosimilar” by now. For everyone else, it’s important to gain a better understanding of biosimilars as these alternatives to expensive biologics become more common and available.
What is a Biosimilar? Is it a Generic?
Many of the top-selling drugs in the world like Keytruda®, Humira®, and Stelara® are biologics and used to treat serious or life-threatening medical conditions. Biologics typically take longer and cost more to develop than conventional medications because their “active ingredients” are complex molecules derived from living organisms. Manufacturing, storage and distribution costs are higher as well.
Unlike the most prescribed drugs in the world—for common conditions like high cholesterol, hypertension and diabetes—there are no generics available for biologics. It is impossible to produce exact chemical replicas of a living organism. However, “highly similar” molecules can be approved for use in place of the original biologic (aka, reference product1).
As a reference product approaches its patent expiration date, other manufacturers may develop and market a biosimilar if it meets Food and Drug Administration (FDA) requirements for approval:
- No clinically meaningful differences in effectiveness or safety
- Produced using the same materials and methods as the reference product
- Available in the same dosage and strength
Quick Recap:
- Similar but not identical: Small variability allowed among therapeutic proteins of the reference product.
- Speed to market: Typically 8-10 years to develop compared to 12-15 years for new biologics.
- Cost savings: Significantly less costly to develop, leading to reduced prices for health plans and patients.
Why Do Biosimilars Matter?
Compared to conventional drugs, biologics make up a very small percentage of all prescriptions written in a year. But due to their high costs, they can account for 70% or more of total prescription drug spending,2 Biosimilars can be more accessible and affordable for patients and the health plans that cover them.
What is Interchangeability?
In most cases, a conventional drug’s generic can be substituted for the brand medication by a pharmacist or at the patient’s request. Biosimilars are a different story. They require a new prescription from the prescriber—unless the biosimilar is interchangeable with the reference product.
With biologics, a biosimilar product must meet additional requirements for interchangeability, and status will vary among different state regulations.3 Interchangeability status can bring instant cost savings to patients and insurers. It may also help avoid questions or delays at the pharmacy or medical facility.
Which Biosimilars, on Which Benefit?
The first biosimilar received FDA approval in 2015. Since then, more than 40 have entered the market for 10 different biologic reference products. Because most biosimilars are administered through injection or infusion, whether in a clinical setting the patient’s home, insurance coverage usually fall under the medical benefit.
Given the high cost and widespread use of Humira (adalimumab), pharmacy benefit managers (PBMs) began including it on formulary and negotiating prices with the manufacturer. Humira was the top-selling drug in the world until its biosimilars entered the market. While adoption was slow at first, more PBMs, providers, and patients have shifted to Humira biosimilars. In 2024, they were the most common biologics switch for RxSS members with a savings opportunity identified in the RxSS engine.4
Stelara (Ustekinumab) is the next “blockbuster” biologic to see competition from biosimilars. Four have launched in 2025. Also covered on the pharmacy benefit, adoption of Stelara’s biosimilars could happen more quickly than with Humira’s due to several market factors.
What’s Next?
Biosimilars represent a significant advancement in healthcare, offering a cost-effective and accessible alternative to high-cost biologic drugs. However factors such as regulatory burdens, slow market adoption, and reimbursement challenges can limit the launch and widespread availability of these therapies. In the recent IQVIA report, 118 biologics are expected to lose patent protection in coming years, but only 12 have biosimilars in development.5 Nonetheless, increasing awareness and strategic policies could enhance their adoption and utilization in the healthcare market.
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Sources:
- United States Food and Drug Administration. “Biosimilars: The Basics for Patients.” FDA, U.S. Department of Health and Human Services, www.fda.gov/drugs/biosimilars/biosimilars-basics-patients. Accessed February 2025.
- “Biosimilars: Why Biosimilars?” Biosimilars Forum, biosimilarsforum.org/why-biosimilars/#:~:text=A%20biosimilar%20is%20a%20biologic,drugs%20in%20our%20healthcare%20system. Accessed February 2025.
- United States Food and Drug Administration. “Biosimilar and Interchangeable Products.” FDA, July 2021, www.fda.gov/media/151094/download. PDF. Accessed [Your Access Date Here].
- RxSS data; eligible members with identified biologics savings opportunities; 2024. Accessed February 2025.
- IQVIA Institute for Human Data Science: Assessing the Biosimilar Void in the U.S., Achieving Sustainable Levels of Biosimilar Competition. Accessed February 2025.
