OBJECTIVES: Biologics represent a rapidly growing portion of Medicare drug spending. To lower prices, the United States (US) Congress created a Food and Drug Administration (FDA) approval pathway for biosimilars, which are versions of biologics that are made by competing manufacturers. However, biosimilar uptake has been slow after expiration of the market exclusivity on the original biologic. We sought to estimate Medicare Part B savings in 2020 had biologics with available biosimilars been reimbursed at comparable prices.

METHODS: In this cross-sectional study, we used public Medicare Part B drug prescribing data from 2020 to extract claims, spending, and spending per claim (price) for all FDA-approved biosimilars and their reference products. We estimated the savings to Medicare if each originator biologic would have been reimbursed at the lower price of its available biosimilar versions.

RESULTS: Eighteen biosimilars associated with 7 originator biologics were reimbursed by Medicare Part B in 2020. Claims were 3.8 times higher for biologics (2,402,270 claims) than biosimilars (685,063 claims). Total expenditure on biologics ($5.2 billion) was higher than for biosimilars ($1.3 billion). Spending per claim was lower for the biosimilar in all cases except one (bevacizumab). Excluding bevacizumab, the average reduction in spending per claim was 18% if the lowest-priced biosimilar had been prescribed. If all claims were reimbursed at the lowest biosimilar prices, Medicare would have saved $596 million in 2020. Substituting 25% of biologics for their associated biosimilar would result in savings of $150 million.

CONCLUSIONS: Even with less expensive biosimilars available, Medicare use and spending on originator biologics remains high. Medicare could achieve substantial savings by reimbursing a single price for biologics and their biosimilars, similar to how Part B reimburses generic small molecule drugs. Increasing biosimilar uptake, for example, by better educating patients and providers about their safety and effectiveness, could also reduce overspending on expensive biologics.