Hospital Adoption and Pricing for Oncology Biosimilars

Many physician-administered oncology biologics are losing patent protection in the coming years and will face competition from biosimilars. Hospitals and insurers share a mutual interest in developing payment methods that share the potential savings from adopting these less costly agents.

To test whether hospitals paid lower acquisition prices and earned higher markup margins for physician-administered oncology biosimilars; whether insurers reduced the reimbursement prices they paid to hospitals, thereby sharing in the savings from lower manufacturer prices; and whether reductions in acquisition prices and increases in hospital margins were associated with accelerated adoption of biosimilars.

Observational study using 2020-2024 data for patients covered by Blue Cross Blue Shield health insurance, linked to information on drug acquisition prices paid by hospitals to manufacturers; drug reimbursement prices paid by insurers to hospitals; hospital eligibility for federal 340B price discounts; and other hospital, patient, and market characteristics.

Biologics and biosimilars acquired by hospitals from manufacturers at one price and reimbursed by private insurers at a higher price.

Acquisition prices paid by hospitals to manufacturers, reimbursement prices paid by insurers to hospitals, hospital drug price markup margin, hospital adoption of biosimilars.

Between 2020 and 2024 (66 139 patients who received oncology biologics and biosimilars in 1541 hospitals), acquisition prices paid by hospitals to drug manufacturers declined by 60%, 72%, and 63% for the biosimilars of bevacizumab, trastuzumab, and rituximab, respectively. The reimbursement prices paid by insurers to hospitals declined more slowly, at 32%, 36%, and 34%, allowing an increase in hospital markup margins. In multivariable regression analyses, each additional dollar of acquisition price was associated with $2.72 in higher hospital reimbursement for bevacizumab (95% CI, $0.51-$4.93), $1.82 for trastuzumab (95% CI, $1.27-2.38), and $2.32 for rituximab (95% CI, $1.56-$3.09). Increases in hospital markup margins were associated with increased adoption of biosimilars, rising from a 32%, 37%, and 18% share of bevacizumab, trastuzumab, and rituximab use in 2020 to 93%, 87%, and 84% by 2024.

Hospital price markup margins from the administration of oncology biosimilars have increased over time and have been accompanied by large increases in the utilization of these therapies.