cost savings with biosimilars . Biosimilars were engineered with the hope of lowering health care costs in the same way that generic medicines have the potential to do . 6 Potentially , they may not bend the cost curve much . There are several reasons why . The first has to do with the nature of pricing . While generic medicines can sometimes be priced much lower than their respective brand medication ( as low as 2 %, for example ) this is not the case for biosimilars , which are priced much closer to the originator branded molecule ( for example , 60 – 70 % of the price ). As such , the cost savings projected will likely never fully be realized .
The second aspect has to do with poorer uptake in the US relative to other non-US countries – or the utilization rate of biosimilar vs . brand on a scale of 0 to 100 % ( 100 % being substitution of biosimilar for brand in every clinical situation ). Maximal economic efficiency would be achieved if there was 100 % biosimilar substitution for a branded medicine . As an example , the utilization of biosimilar filgrastim is around 24 % in the US where the price is 70 % of the branded filgrastim . In Japan , biosimilar filgrastim utilization is 45 %, and is at 60 % in EU countries .
Third , there is a marked temporal delay in the approval of biosimilar medicines in the US compared with other countries , for myriad reasons – including the ‘ patent dance .’ As a result , there are fewer biosimilars available in the US through 2020
If the economics of paying for biosimilars sounds complicated , it is only because it is !
than in non-US countries . Combined with a slower uptake in utilization which is not approaching 100 %, the cost savings are difficult to materialize .
A fourth impediment against the use of biosimilars is the way specialty care is paid for and the economic perspective of the provider or the hospital / medical system rather than the payer . The delivery of medications within a health care system can be economically driven by an ‘ upcharge ’ on the cost of the drugs . For example , infusions or injections administered on site are billed to the insurance company and reimbursed at a price point that is greater than the cost of the medicine . This can be as low as 4.5 % or 6 % ( that is , a 6 % markup on the cost of the medicine ) or above 20 % depending on the contractual negotiations . With an expensive medicine such as a biologic , this amount can represent a significant profit for the institution – whether in private practice , or in an academic center that employs physicians . The use of 340B pricing presents another twist and turn . This is a federal law that was originally developed and intended to allow institutions that care for a disproportionate share of patients who are uninsured or who have poorly paying insurance to maintain budget neutrality . However , the 340B option was quickly taken up by both academic and non-academic institutions , if part of their patient base were uninsured or under-insured . 7 However ,
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