Savings from biosimilars and Medicare formulary access

TL;DR

Medicare formulary design can help increase access to biosimilars, save costs, and encourage their development, but current policies limit their use compared to generic drugs.

Contribution

The paper highlights how Medicare Part D formulary design affects biosimilar access and suggests policy changes to promote their use and development.

Findings

Adalimumab biosimilars have lower formulary access compared to the original drug.

Beneficiaries often pay higher coinsurance for biosimilars than the fixed copay for generics.

Limited biosimilar market growth restricts potential cost-savings in Medicare.

Abstract

We reflect on how Medicare Part D formulary design could facilitate access to biosimilars, create cost-savings, and motivate investment in biosimilar development. We evaluated adalimumab, a self-administered biologic for inflammatory conditions with the most approved biosimilars, including interchangeable as a case study. We found that formulary access in Part D for adalimumab biosimilars is lower relative to the innovator. Moreover, when adalimumab biosimilars are on the formulary, beneficiaries typically pay coinsurance, a cost higher than a fixed copay. This is unlike generic drugs, whose coverage in most Part D formularies typically has a co-pay of $5 or less (Dusetzina SB, Cubanski J, Nshuti L, et al. Medicare Part D plans rarely cover brand-name drugs when generics are available. Health Aff [Millwood]. 2020;39[8]:1326-1333. https://doi.org/10.1377/hlthaff.2019.01694). The US biosimilar market has been slow to grow, limiting potential cost-savings. The investment required to develop and manufacture a biosimilar is larger than that for a generic and requires a greater return for investment, and many off-patent biologics lack a biosimilar competitor (Arad N, Staton E, Hamilton M, et al. Realizing the Benefits of Biosimilars: Overcoming Rebate Walls. Duke Margolis Center for Health Policy; 2022). The Food and Drug Administration's October 2025 effort to simplify evidence requirements for biosimilarity may reduce development costs, but without market access financial returns from development are limited (Food and Drug Administration. FDA moves to accelerate biosimilar development and lower drug costs [press release]. October 29, 2025. https://www.fda.gov/news-events/press-announcements/fda-moves-accelerate-biosimilar-development-and-lower-drug-costs). Policies to encourage formularies to expand access to biosimilars in programs such as Medicare could motivate investment.