Plain Language Summary

This research explores how biosimilar drugs have impacted pricing in the US pharmaceutical market, especially focusing on Medicare Part B from 2015 to 2023. Biosimilars are similar to already approved biologic drugs but are usually more affordable. The study shows that increased competition from biosimilars has led to significant price reductions for both original products and biosimilars. Specifically, the entry of each additional biosimilar competitor reduced the price of originator products by about 10% to 13% and overall market prices by 13% to17%.

The study analyzed data from 8 biologic markets over 34 quarters, utilizing pricing information from the Centers for Medicare & Medicaid Services. Findings indicate that as more biosimilars entered the market, prices dropped significantly, generating substantial savings for Medicare. This price reduction is linked to increased competition, as measured by the Herfindahl-Hirschman Index, which assesses market concentration. A 10% decrease in market concentration corresponded to a 1.8% drop in originator product prices.

Compared to earlier studies, the impact of biosimilar competition on prices appears to have grown over time. The biosimilar market continues to expand rapidly, with new biosimilars launched in 2023, including those competing with Humira, the world's top-selling drug. The US Food and Drug Administration is considering regulations that might further enhance biosimilar competition, potentially leading to more price reductions.

However, these aggressive price declines raise concerns about the long-term sustainability of the biosimilars market. Lower prices could discourage manufacturers from investing in research and development for new biosimilars. Moreover, supply chain challenges may arise, potentially leading to shortages of biosimilar drugs. These effects could destabilize the market, which already experiences issues with generic drug availability.

Despite the benefits of reduced prices and Medicare savings, the study warns that if these trends continue, the biosimilars market might face sustainability challenges. The potential for reduced competition could lead to price increases in the future, affecting both patients and healthcare systems. For policy makers and healthcare decision makers, these findings highlight the need to ensure a balanced approach that maintains the benefits of competition while safeguarding the market's long-term viability.

Overall, while biosimilars have significantly disrupted the pharmaceutical market by lowering costs, careful consideration is needed to address sustainability and supply chain concerns to ensure continued access to affordable medications.

^{Note: This content was created with assistance from artificial intelligence (AI) and has been reviewed and edited by ISPOR staff. For more information or for inquiries on ISPOR’s AI policy, click here or contact us at info@ispor.org.}