A new study released today found that, by removing barriers holding back the increased use of biosimilars, savings could be significant. In a case study of infliximab, used to treat rheumatoid arthritis, Crohn’s disease, and other illnesses, reforms could realize an annual savings of between $412 million and $465 million.
“Americans have saved a lot on prescription drug costs through the increased use of lower-cost generic medications,” said Dr. Wayne Winegarden, author of the new study. “As the next generation of treatments are developed, government and market barriers must not stand in the way of using cheaper biosimilars for more biologically-complex treatments. My study found that we could save significantly if barriers were lifted and biosimilars were used more often.”
Biosimilar medicines are lower-cost alternatives for patients and providers. Unlike generic medications, which are chemically identical to the original product, the size and complexity of the biologic molecules make it impossible to make an identical biological molecule.
Winegarden noted that greater use of biosimilars had the potential to reduce costs for these treatments in the same way the increased use of generic medications has. Reforms enacted in federal law in 1984 reduced excessive regulatory burdens for generic drug manufacturers, while extending terms and clarifying rights for patent holders. Generics saved the U.S. health system $1.67 trillion between 2007 and 2016 alone.
Biologic medications aren’t as commonly used but have significant potential. It is estimated that the global market will grow from $46 billion in 2002 to $390 billion by 2020. One industry estimate projects that increasing biosimilar use should cut prices by around 30 percent.
In “Impediments to a Stronger Biosimilars Market,” Winegarden uses the case study of biosimilars for infliximab, commonly known as Remicade (used to fight rheumatoid arthritis, Crohn’s disease, ulcerative colitis, chronic severe plaque psoriasis, and active psoriatic arthritis) to show that increasing the use of biosimilars can benefit patients, employers, and taxpayers.
Among his findings:
- Annual per patient savings between Remicade and the biosimilar would range between $2100 and $4400.
- If biosimilars grew to become one-half of the infliximab market, annual cost reductions for employer-sponsored health plans would be as
high as 8.4 percent, or between $262 million and $315 million less.
- Savings to taxpayers through lower Medicare costs from utilizing biosimilars could be as high as 8.1 percent, or $150 million in savings annually.
- Collectively, there could be savings of between $412 million and $465 million a year – just for increasing the use of biosimilars for one drug alone.
Dr. Wayne Winegarden is a Senior Fellow in Business and Economics at Pacific Research Institute. He is also the Principal of Capitol Economic Advisors and a Managing Editor for EconoSTATS.