Do biosimilars save money, as analysts exclaim

In recent years, much has been discussed about the biosimilars and biosimilar market and its potential to reduce healthcare expenses. However, the question still arises: do biosimilars save money? This write-up will focus on how these medicines are restructuring the healthcare landscape regarding cost savings and enhancing patient care.

There is an increasing burden of chronic illnesses globally, and it becomes cumbersome for most people to get life-saving drugs, putting them in jeopardy. It is essential to develop affordable life-saving drugs to enhance patient’s quality of life and to lessen health inequality. 

A biosimilar is an identical copy of a biological drug that is no longer a novel and untried class of medicines. Biosimilars are safe, effective, and affordable treatment options for chronic skin, bowel diseases, kidney conditions, cancer, etc. Biosimilar drugs require much less research and development for equal efficacy and safety than their reference biologics since they are similar copies. This signifies that they are much cheaper to manufacture. Regarding healthcare budget, biosimilars can regulate the healthcare economic burden as biosimilars can be obtained at reduced prices compared to the reference biologic and can result in price competition amongst biologic drugs.

Biosimilar Market Growth and Competition

It is evident that the biosimilar market is growing faster, including 42 U.S. FDA-approved biosimilars, as of August 2023. With more introduction of biosimilars, the benefits of regulating health care expenses and patient access to medication will continue to grow over time. As the U.S. is the first country to develop biosimilars, the U.S. market has evolved significantly due to an efficient regulatory framework. The approval rate of biosimilars in the U.S. is way higher than in the European Union, with seven more biosimilars ready to be launched by the end of 2023.

Biosimilars to Save Millions on Healthcare Expenditures, According to Analysts

Several recent studies have revealed that increasing adoption of biosimilars has resulted in substantial savings and validates why it is imperative to encourage and develop more novel biosimilars.

In comparison to generic drugs, biosimilars are available in reduced price because biosimilar manufacturers subject to the FDA’s outcome that the original biologics are safe and effective. However, the low cost of biosimilars does not indicate the efficiency or safety of biosimilars. More insurance companies can cover biosimilars and offer patients supplementary treatment options due to their lower cost. Biologics are considered the fastest-growing and most expensive in the prescription medication market. Thus, FDA approval of additional biosimilar and interchangeable biosimilar medications may aid in market competitiveness, providing patients with more treatment options and possibly less expensive substitutes.

In terms of U.S. market landscape, the biosimilars market is currently ascertaining that market competition is beneficial in lowering the drug pricing and escalating patient access to medicines. For instance, according to the report by IQVIA, savings from biosimilars augmented over 800% from USD 900 Million in 2018 to USD 7.9 Billion in 2020.

Referring to the latest  Xcenda report, the average sales price for many reference products and biosimilars has lessened by over 45% since the launch of biosimilar competitor products (Part B medicine reimbursement). This indicates that although many business factors contribute to reducing drug prices, the entrance of competitors in the market plays a key role.

Moreover, according to Andrew W. Mulcahy, a senior policy researcher at RAND (a non-profit organization), “Biosimilars have the potential to lower spending on biologic drugs that account for a rapidly increasing share of overall U.S. prescription drug spending”.

Analyzing the India biosimilar market, India’s biosimilar market is thriving. Interestingly, India was the first country to get approval for its biosimilar in 2000, way ahead of the U.S. and EU. The first biosimilar approved in India was for hepatitis B. However, no explicit guideline was available at that time for developing and marketing biosimilars in India. Currently, the biosimilar ecosystem in India is flourishing, allowing the pharmaceutical companies of India to lead the global biosimilar market.

The biosimilar market in India generated a revenue of USD 300 million in 2015 with a CAGR of 14%, according to an article published in NCBI. Moreover, India gained USD 51 million from the export of biosimilar or similar biologics in 2015. Similarly, a report by ASSOCHAM-Sathguru published in 2016 states that biosimilar exhibits a USD 240 billion global opportunity for the Indian biopharmaceutical industry, and the India market will be valued at USD 40 billion by 2030. These options can provide easier access to patients with affordable healthcare and pave the way to regulate healthcare budgets.  

Besides the advantages, knowing how biosimilars offer potential savings to national health services is essential. Highlighting the European market landscape, there is a rising incidence of cancer in European countries such as Spain, which rose by 12.6% between 2012 and 2020 (IARC Report). This indicates the availability of fewer resources to treat the growing patient population.

It is known that a biosimilar can be available in the market after the patent expiration of the reference medicinal product. After analyzing the U.S. market and the five largest European markets, including Germany, France, Italy, the United Kingdom, and Spain, the IMS Health Report stated that in 2020, biosimilars saved a whopping 98 billion euros. This economic contribution of biosimilars offering similar quality, efficacy, and safety to their reference products aids in saving significant healthcare expenditure (25% less than their original medicinal counterparts, reported by the Spanish National Health System). Furthermore, industry consensus estimated that biosimilars would save around 1.5 billion euros by 2020, highlighting their potential for ensuring more sustainability in healthcare provision.

The economic impact and savings data indicate biosimilars as a preferred option from the perspective of public health spending. However, in the first place, levying set prices may discourage biosimilar manufacturers from developing and launching their medicines in the market, further reducing patient access. Moreover, to exploit the full potential of the biosimilar marketplace and the savings it offers to the healthcare system, policymakers need to analyze the balanced policy approach to ensure ample incentives for continual innovation and patient choice.