OBJECTIVES:

The emergence of biosimilar products has resulted in hopes of significant cost savings on biologic therapies. While previous work has analyzed generic competition in small molecule products, there is limited empirical knowledge of the impact of biosimilar entry on the extensive margin (utilization of drugs by patients) as well as the intensive margin (impact on unit prices). We study various measures of social welfare gain from biosimilar entry in the basal insulin market in the United States.

METHODS: We calibrated and simulated a nested logit discrete-choice Bertrand oligopoly model to quantify the social welfare gains from biosimilar entry in the basal insulin market. We estimate the effects of the first and the first three competitive entries on the extensive and intensive margin under select scenarios between 2020 and 2030.

RESULTS:

The first and first 3 biosimilar basal insulin entries can reduce the market-level average net price by 7.26% and 16.52% by year 2030, respectively; increase utilization by 0.83 and 2.05 million patient-years by year 2030, respectively; and save existing patients $2.01 and $4.55 billion, respectively, between 2020 and 2030.

CONCLUSIONS: Our model predicts that biosimilar entries can reduce prices, increase utilization, and save costs in the basal insulin market.