Understanding the Impact of Biosimilars on Employer Health Care Costs
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
Rising health care costs will likely continue to impact employers in the foreseeable future. The introduction of biosimilar drugs as an alternative to biologics may bring value to health care by offering cost savings and increasing employee access to necessary medications. While biosimilars can help employers mitigate rising prescription drug costs, employers will need to learn more about them before considering how their health plans can accommodate these newer drugs.
This article explores biosimilar drugs and their impact on employers’ health care costs.
Biosimilar Overview
Unlike generic drugs, biosimilars are not identical to their reference biological products (also called the brand-name counterpart) and aren’t created from synthesized chemicals. A biosimilar drug is a biological product produced from living organisms—humans, animals or microorganisms. Approved by the Food and Drug Administration (FDA), biosimilars are similar to the reference drug (a previously FDA-approved biologic), but have no significant clinical differences. Compared with biologics, biosimilars have the same strength, dosage and potential side effects but provide the same treatment benefits.
The FDA rigorously evaluates biosimilars to validate their efficacy, safety and quality. The FDA has approved over 40 biosimilars; however, not all are commercially available.
Biosimilars are safe and effective treatment options for many illnesses, including chronic skin and bowel diseases (e.g., psoriasis, irritable bowel syndrome, Crohn’s disease and colitis), arthritis, kidney conditions and cancer. They can potentially increase access to lifesaving medications at a lower cost.
Impact on Health Care Costs
As prescription drug costs continue to rise, employees are realizing increased out-of-pocket expenditures for the medications they and their families depend on. Specialty drugs, including biologics, are the fastest-growing part of drug costs.
The Biosimilars Council estimates that 1.2 million people will have access to more affordable biologic medicines by 2025 due to the availability of several leading biosimilars. The exclusivity period for the following drugs either has ended or will expire before 2025, which will open the door for biosimilar approval:
- Humira (adalimumab) for rheumatoid arthritis (RA), Crohn’s disease and ulcerative colitis
- Remicade (infliximab) for RA, Crohn’s disease and ulcerative colitis
- Neulasta (pegfilgrastim) to prevent infection following chemotherapy
- Enbrel (etanercept) for RA
- Avastin (bevacizumab) to treat eye diseases and different types of cancer
- Lucentis (ranibizumab) to treat eye diseases
- Rituxan (rituximab) to treat certain autoimmune diseases and types of cancer
Five of those seven products are among the country’s biggest-selling brand biologics, accounting for more than 30% of total biologic sales in the United States. The research further suggests that women, lower income and elderly individuals stand to benefit most from access to biosimilars. Utilization demographics of those previously-mentioned specific products reveal that 86% of patients are older than 40, 67% are women and 42% are low-income.
Research suggests that large and self-insured employers have the most to save regarding biosimilars. According to The ERISA Industry Committee (ERIC), in 2018, self-insured employers in the United States could have saved $1.4 billion by promoting the use of biosimilars in their employer-sponsored health plans. Furthermore, ERIC research found that patients who took the biosimilar medicine paid, on average, 12% (about $300) and 45% (about $600) less out of pocket than those who took the biologic.
Ford Motor Co. (Ford) is one such organization exploring biosimilar substitution plans and having success. Ford required new and current users of Remicade to convert to Inflectra. Since the transition began in 2019 and an expansion to four other biosimilars, Ford has saved nearly $5 million.
By 2025, the Biosimilars Council reports that biosimilars will save the national health care system up to $183 billion. With many Americans relying on their employers for health coverage, more employers are considering biosimilars as a viable solution to lower health expenditures and pass savings to their employees. Not only can employers potentially reduce specialty drug costs, but also promote better health outcomes for their employees and their families.
Summary
Biologics account for much of specialty drug costs and are typically cited as a leading driver of rising prescription drug costs. As the potential for biosimilars continues to grow, more employers may consider promoting them to help realize cost savings in their health plans and offer less expensive drug alternatives to their employees.
Contact us to learn more about health care cost mitigation trends.
- Published in Blog
U.S. Drug Overdose Deaths Hit Record High in 2021
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
According to new Centers for Disease Control and Prevention data, an estimated 107,622 Americans died from drug overdoses in 2021, a 15% increase from the previous year. Fentanyl, a powerful synthetic opioid, was involved in the most deaths.
Opioids were again responsible for the vast majority (75%) of overdose deaths in the country. Deaths by overdose may involve multiple drugs; therefore, a single death might be included in more than one drug category. Here is the drug breakdown of overdose deaths in 2021:
- Fentanyl: 71,238
- Methamphetamine: 32,856
- Cocaine: 24,538
- Prescription pain medications: 13,503
Overdose deaths have been on the rise for years in the United States, but they surged during the pandemic, especially in its first year. For perspective, annual deaths were nearly 50% higher in 2021 than in 2019.
Throughout the pandemic, experts noticed an uptick in substance abuse amid widespread unemployment and more Americans reporting mental health issues, such as anxiety and depression. Even as the pandemic ends, it won’t be a quick switch back to normalcy since these conditions will need to be addressed and treated.
Treatment, or the lack thereof, is a crucial reason overdose numbers continue to rise. Drug abuse treatment was lacking even before the pandemic. According to the U.S. Department of Health and Human Services, more than 20 million people age 12 and older reported having a substance abuse disorder in 2019—but only 10% were receiving care.
“You won’t see a reversal in the same way you saw the acceleration because these drug distribution networks and addiction become embedded in the community. And it’s not like they turn off overnight.”
-Katherine Keyes, associate professor at Columbia University Mailman School of Public Health
What’s Next?
Undoubtedly, the pandemic accelerated trends already heading in the wrong direction. Reversing this course will take concentrated efforts—and time.
May is designated as Mental Health Awareness Month in the United States. Mental health problems and substance use disorders sometimes co-occur. This month is a reminder to check in with yourself and others living with mental health conditions and facing substance abuse. If you have concerns, reach out to a doctor or use the Substance Abuse and Mental Health Services Administration’s National Helpline by calling 800-662-HELP (4357).
- Published in Blog
More Drugs, Less Money
By Alison Nelson, Account Manager
You may know him from Shark Tank or as the owner of the Mavericks, but you may soon know Mark Cuban as the man disrupting the pharmaceutical industry. It was recently announced that, billionaire Mark Cuban, has launched an online pharmacy boasting significant savings when compared to some traditional pharmacies. What makes this online pharmacy, Cost Plus Drug Company, stand out is their commitment to pricing transparency.
Cost Plus Drug Company is basing their prices on a 15% markup from the manufacturer cost and a $3 labor charge. This results in candid transparency on how much prescriptions costs to make. One of the medications listed on their website, estimates a $6,112.28 savings. The pharmaceutical industry is often associated with price gouging, prompting anticipation to see how other pharmacies respond.
To read more about Cost Plus Drug Company, read this NPR article or visit their website here.
- Published in Blog
Dazed and Confused
By Bailey Penrose, Employer Services Account Manager
Marijuana is becoming a problem, y’all. Not from any philosophical or moral viewpoint (that’s an individual’s point of view and out of my purview) but from an employment standpoint. As it currently stands, 36 US states and 4 US territories have legalized cannabis products for medicinal use; 18 US states, 2 US territories, and the District of Columbia have legalized cannabis products for recreational use. On the flip side, on the federal level the use of cannabis products for either medicinal or recreational purposes is totally illegal.
The divide between state and federal regulation is causing some distinct headaches as employers and individual’s try to understand which standard to follow. We don’t have to look very far to see examples of this. Just look at the headlines from the beginning of July, where athlete Sha’Carri Richardson ran afoul of differing rules:
Guidance is still coming, but I’m afraid it’s going to be a little bumpy as the US feels it’s way through the quagmire. Please see the articles included here for more information on how these regulations realistically apply to employers and their employees.
Weed at Work: Must Employers Accommodate Medical Use?
How Should HR Respond to Federal Marijuana Legalization?
Alaska Drug and Alcohol Testing Laws
Legalized Marijuana and Employment – Off-Duty Use and Drug Testing
- Published in Blog
