Report Highlights Biosimilars Savings, but High Out-of-Pocket Costs for Patients

A report from the Association for Accessible Medicines (AAM) found that biosimilars and generics were able to save the US $445 billion by the end of 2023. However, despite these savings, the out-of-pocket (OOP) costs to patients remains high, which can affect the impact and adoption of biosimilars and generics across the nation.^1,2

AAM released their annual savings report, which is released in an effort to educate the public on the cost of biosimilars and generics on September 6.³ The report published notable statistics about generics and biosimilars in the US, including the fact that 90% of all US prescriptions were generics or biosimilars in 2023. Still, both generics and biosimilars accounted for only 13% of all drug spending and just 1% of overall US health care expenses in the same time frame.

Medicare accounted for $137 billion of the total savings from both generics and biosimilars, with the commercial market accounting for $206 billion. Biosimilars made up $12.4 billion of the savings, which brings their overall savings since their introduction in 2015 to $36 billion.

Use of biosimilars and generics led to significant cost savings | Image credit: joyfotoliakid - stock.adobe.com

Patients with heart disease were the biggest winners when it came to cost savings, with generics saving patients $118.1 billion. They were followed closely by patients needing medication for their mental health, who saved nearly $76.4 billion; patients with diabetes, who saved $61 billion; and patients with cancer, who saved $25.5 billion. States saved approximately $8 billion each on average through the usage of generics and biosimilars, ranging from savings of $600,000 in Alaska to nearly $38 billion in California.

Despite the $445 billion in savings in 2023, up from $408 billion in savings in 2022, high OOP costs, drug shortages, and ineffective policies keep biosimilars from being more widely used and affecting their adoption across the nation. These OOP costs are often due to pharmacy benefit managers (PBMs) and other health plan formulary decisions that favor biologics over biosimilars or place generics on non-generic tiers. Although formulary tiers are aimed at rewarding patients for using medications that are at the lowest cost, Medicare Part D plans place generics and biosimilars on higher tiers and higher copays, forcing those on Medicare to pay more for the generics meant to be cheaper.

PBMs can also play a role in higher costs, as PBMs may favor higher-cost brand-name drugs over generics due to deeper rebates offered by brand-name drug manufacturers. However, this strategy ends up costing patients more.

Another challenge when it comes to getting generics to more patients is the drug shortages across the nation, with 60% of drugs that are in shortage priced at only $1 per unit or less. Government policy should focus on more sustainable pricing for generics, which are unsustainably low, and earlier adoption of the generics.

Overall, biosimilars and generics act as an appealing alternative for medication, as the cost savings through the nation are significant and can benefit both insurance and the patients. To make sure that these cost savings are felt throughout the nation, policymakers need to prioritize encouraging uptake of biosimilars, PBMs should prioritize offering biosimilars and generics to their customers, and generics and biosimilars should be priced accordingly to encourage more sustainable demand.

References

1. Jeremias S. AAM report: generics and biosimilars savings reach $445 billion in 2023, part 1. The Center for Biosimilars. September 18, 2024. Accessed September 27, 2024. https://www.centerforbiosimilars.com/view/aam-report-generics-and-biosimilars-savings-reach-445-billion-in-2023-part-1
2. Jeremias S. AAM report: despite massive savings, patient OOP costs on biosimilars, generics remain high, part 2. September 24, 2024. Accessed September 27, 2024. https://www.centerforbiosimilars.com/view/aam-report-despite-massive-savings-patient-oop-costs-on-biosimilars-generics-remain-high-part-2
3. The U.S. generic & biosimilar medicines savings report: September 2024. AAM. September 6, 2024. Accessed September 27, 2024. https://accessiblemeds.org/sites/default/files/2024-09/AAM-2024-Generic-Biosimilar-Medicines-Savings-Report.pdf