Understanding biosimilars and projecting the cost savings to employers

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By Frank R. Kopenski | 06 April 2012

The prescription drug market has seen dramatic changes as the patents on most of the longtime blockbuster drug products have expired (or will expire soon) and cheaper priced generic products take their place. The patented drugs that are left will be predominantly specialty drugs, the largest component of which are biologics—drugs that are manufactured in a laboratory using living organisms such as human protein.

In the last 18 months, Congress, through the Patient Protection and Affordable Care Act (PPACA) and more specifically the Biologics Price Competition and Innovation Act of 2009 (BPCIA), has determined that chronically ill patients should have access to lower-cost drug alternatives, which has brought biologics and biosimilar drugs into the spotlight. Biosimilars, or follow-on biologics, are approved drugs that attempt to replicate the original biologic drug manufacturer’s development processes.

The purpose of this study is to quantify the impact of biosimilar savings to employers and take a closer look at the potential drivers of cost savings and their variability. Employers can use this study to help understand the implications of such changes on future healthcare expenditures and determine the timing and to what extent human resources need to be devoted to this area of their healthcare cost management.

This report was prepared for Amgen, Inc., in December 2011. The study was released in April 2012.