New research shows competition driven by biosimilars helps control costs in Part B

Discussions about spending in Medicare Part B, including a recent report from the Medicare Payment Advisory Commission, or MedPAC, too often overlook how competition between medicines drives down the program’s costs. This competition in turn helps control costs for seniors and people with disabilities who rely on Part B to access their medicines.

One key driver of competition in Part B is biosimilars. A biosimilar is exactly what its name implies – a biologic that is highly similar to and has no clinically meaningful differences from an existing biologic medicine that is already licensed by the U.S. Food and Drug Administration (FDA). Since Congress enacted the Biologics Price Competition and Innovation Act in 2010, a robust biosimilars market has emerged in the United States, yielding increased competition and substantial savings for patients and the government.

Considering this and the amount of data available on how well biosimilars drive competition and bring costs down in Part B, it is alarming that Congress would pursue flawed policies like those found in their latest drug pricing proposal, which would allow the government to continue to set the price of a medicine even after a generic or biosimilar comes to market. While the proposal’s authors claim to want to lower costs for patients and the health care system, diminishing the incentives necessary to the development of new generics and biosimilars will do the opposite.

Two new analyses looked at how increasing uptake in the use of biosimilars in the U.S. health care system has yielded significant savings in Medicare Part B and demonstrate why we need to encourage, not disrupt, this progress.

According to a recent Xcenda report, the average sales price – the price at which medicines are reimbursed in Part B – of many biologics and biosimilars has decreased more than 45% since biosimilar competitor products have launched. As Xcenda explains “while many business factors contribute to lowering drug prices, competitors flowing into the market undoubtedly play a key role.”

Additionally, an analysis conducted by Moran Company indicated that biosimilars have also helped decrease costs for the Part B program. In fact, on average, payment amounts for the top 50 Part B medicines decreased by 1.7% from the first quarter of 2022 to the second. Moran found that the Part B products with the biggest decreases were biosimilars or biologics with biosimilar competition. ASP decreased 7.5% or more between the first quarter 2022 and the second quarter 2022 for seven of the top 50 Part B drugs. Decreases in ASP for these seven drugs range from 7.5% to 24.6%.

According to an IQVIA report, physician-administered biosimilars are anticipated to save more than $100 billion in total between 2020 and 2024, with much of this savings benefiting the Part B program.

While the Part B reimbursement system and robust biosimilar market are working to control costs for Part B enrollees, PhRMA opposes flawed price-setting proposals and instead supports ways to modernize how Medicare covers and pays for medicines, including biosimilars. For example, PhRMA has long supported manufacturers providing an additional discount to Medicare Part B, such as a market-based adjustment in Part B that would allow the government and seniors to benefit from more of the savings already negotiated in the commercial market. This in turn could save some seniors hundreds – if not thousands – of dollars each year.

Learn more about the Part B program. And take action to tell Congress that government price setting proposals that discourage the development of biosimilars are bad policy.