The three-fer: How biosimilars reduce cost, expand access, and improve margin.

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Quality Improvement Science

Background:

• Traditional Medicare Fee for Service (FFS) covers reference biologics and biosimilars without prior authorization (PA).
• Biosimilars provide a cost-effective, safe, and effective alternative to reference biologics.

Purpose of the Study:

• To decrease Medicare FFS patient use of reference biologics in oncology by 50%.
• To reduce Mayo Clinic Community Accountable Care Organization (MCC ACO) spending and achieve institutional cost savings.
• To improve revenue by increasing the utilization of biosimilars.

Main Methods:

• Implemented a Quality Improvement (QI) framework to expand a biosimilar-first strategy.
• Utilized targeted electronic health record (EHR) reports to identify Medicare patients using reference biologics when biosimilars were available.
• Facilitated patient conversion to lower-cost, formulary-preferred biosimilars through pharmacist and physician outreach and education.

Main Results:

• Achieved a 47% reduction in reference biologic use among Medicare patients.
• Decreased MCC ACO spending by $2.62 million and reduced per-utilizer-per-month spending by 13.9%.
• Improved medication margins by over $2.2 million for a modeled patient volume of 1,000 per drug category.

Conclusions:

• Quality improvement initiatives effectively reduced reference biologic utilization in Medicare patients.
• The shift to biosimilars successfully lowered healthcare spending and increased patient access.
• The strategy improved financial margins, demonstrating the economic benefits of biosimilar adoption.