Projected US savings from biosimilars, 2021-2025

Biologics account for an increasing share of US prescription drug spending. Biosimilars could lower biologic prices through competition, but barriers to increasing both supply and uptake remain. We projected US biosimilar savings from 2021 to 2025 under different scenarios.

We projected US spending on biologics over a 5-year period under 3 scenarios: (1) a baseline scenario holding quarter 4 (Q4) of 2020 market conditions constant; (2) under main assumptions allowing for biosimilar market growth and entry; and (3) an upper-bound scenario assuming greater biosimilar uptake, more robust price competition, and quicker biosimilar entry.

We first analyzed 2014-2020 US volume and price data from IQVIA's MIDAS database for biologics already facing biosimilar competition to inform model parameter values. We used these inputs to project biosimilar entry, biosimilar volume shares, biosimilar prices, and reference biologic prices. We calculated 2021-2025 new savings from biosimilar competition vs the Q4 2020 baseline.

Estimated biosimilar savings from 2021 to 2025 under our main approach were $38.4 billion, or 5.9% of projected spending on biologics over the same period. Biologics first facing biosimilar competition from 2021 to 2025 accounted for $26.1 billion of savings, with $12.2 billion from evolving market conditions for already-marketed biosimilars. Furthermore, $24.6 billion of savings under our main approach were from downward pressure on reference biologic prices rather than lower biosimilar prices. Savings were substantially higher ($124.5 billion) under the upper-bound scenario.

Biosimilar savings from 2021 to 2025 were $38.4 billion under our main assumptions. Greater savings may be feasible if managed care and other settings increase biosimilar utilization and promote competition.