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Biosimilars may reduce US health care spending by $54 billion

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A study recently published by the RAND Corporation showed biosimilars may lead to a reduction in health care spending in the United States on biologic drugs to treat illnesses, such as rheumatoid arthritis and cancer, during the next decade.

“Biologics account for the fastest-growing segment of prescription drug spending, but biosimilars have the potential to help slow some of the increase,” Andrew W. Mulcahy, lead author of the study and a policy researcher at RAND Corporation, said in a company press release. “However, there remains many important industry, regulatory and policy decisions to be made that will influence whether such savings are realized.”

By examining studies that have analyzed estimates of savings from biosimilars, reviewing the sales history of more than 100 biologic drugs and studying the brief experience of the one biosimilar drug that has been marketed in the United States, researchers developed an estimate of savings from biosimilars.

Results showed that during the next decade, the use of biosimilars may cut spending on biologics by about 3%. Researchers noted a variation in the range of the new savings estimate from $24 billion to $150 billion from 2018 through 2027 when given reasonable ranges of key assumptions, such as the price of biosimilars vs. reference biologics and biosimilar market share. Compared with a study released by RAND 3 years ago, this estimate is about 20% larger and represents improved analysis methods and rapid growth in spending for biologics overall, according to the release.

The release also noted the introduction of biosimilars to the U.S. marketplace is expected to increase competition and drive down prices, which may result in savings for patients, health care payers and taxpayers. Decreased costs may also improve access to biologic drugs, leading to higher spending overall unless the treatments help lower hospitalizations or other costs.

“The actual savings hinge on the evolving competitive landscape in the pharmaceutical industry, regulatory decisions and insurer efforts to promote biosimilar uptake through payment rates and other strategies,” Mulcahy said in the release. “Future research will be needed as more biosimilars come to market to see whether savings are realized and who benefits from any reductions in spending.”

Reference:

www.rand.org/pubs/perspectives/PE264.html