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Study: Biosimilars Can Help Address Economic Shortfalls

D Magazine

By Plamedie Ifasso

Texas state and local governments can help combat the economic downfalls of the pandemic by encouraging health care plans to implement the use of biosimilars, a recent study from the Institute for Policy Innovation finds.

Biologics are complex drugs that are usually injected or infused, and can be used to treat diseases such as arthritis and cancer. Similar to generic versions of brand name drugs, biosimilars are the generic version of biologics.

Unlike the brand name biologics, biosimilars cost about 30% less, Merrill Matthews, a resident scholar with the Institute for Policy Innovation in Dallas, said. Matthews predicts that pushing biosimilars into the market will foster competition in the health industry and create more savings for Texas governments and patients.

“One of the things that happens with biologics and biosimilars is that they tend to pull down the prices of biologics across the competition,” Matthews said. “The more that expands, then I think you’ll see more people wanting to move towards that, and, of course, what really drives this is often times the insurance companies or your employer.”

Despite cost savings, biosimilars are not as widely used as traditional generic drugs. One of the reasons for the slow use of biosimilar in the health care market is pharmaceutical companies’ desire to retain a monopoly, Matthews says.

“A drug company, that spends a billion dollars to create a drug would like to preserve the monopoly on it for as long as possible, “ Matthews says. “They often times put up some resistance to other companies coming and creating the generic versions of biologics.”

The second obstacle that Matthews lists in the growth of biosimilars is the way medication is paid for. When drug manufacturers create and set a price for a drug, pharmacy benefit managers can negotiate discounts and even rebates for pharmaceutical companies to advertise a certain drug. Because biosimilars are inexpensive, PBMs make more money promoting brand name drugs to patients instead of the generic version.

The third hurdle preventing the advancement of biosimilars is consumer education. Biosimilars are not as advertised as their brand name counterparts.

In some cases, when a consumer sees a doctor, they might ask for a brand name biologic because they have seen an advertisement for it. Educating consumers about biosimilars can help catapult it into the market, Matthews says. The more consumers are aware of the existence of biosimilars, the pressure to adopt biosimilars will increase

Matthews also believes that if state and local government transition to biosimilars, they could encourage the health care industry to implement the use of biosimilars.

“[State and local government] have to pay for the care of their government employees, so if they’re aware of [biosimilars], then they may say, ‘we need to make the transition there,’” Matthews said. “They might go to a conference and mention that they might save money here, and then you get a little pressure and to start moving in that direction.”