Biosimilars have the potential to reduce Medicare drug spending.1,2 Biosimilars are genericlike alternatives to biologic drugs—complex medicines derived from biological sources—that currently account for 37% of US prescription drug spending.3 In the retail pharmacy sector, the entry of generic medicines leads to quick increases in generic market share and considerable decreases in total spending; however, savings from initial biosimilar launches have been smaller than predicted.4 In this cross-sectional study, we describe and decompose changes in annual Medicare Part B spending for biologic drugs after biosimilar entry, focusing on the first 4 products to experience biosimilar competition: filgrastim, infliximab, epoetin alfa, and pegfilgrastim.
We obtained total annual administration volume (allowed services) and Medicare spending (payment) for 2013 through 2019 from the Centers for Medicare & Medicaid Services’ Part B National Summary Data Files. For each product, we converted administration volume to a consistent dose (filgrastim, 1 μg; infliximab, 10 mg; epoetin alfa, 1000 units; and pegfilgrastim, 6 mg) and calculated observed prices by dividing Medicare spending by the standardized volume. For each product class, we calculated the biosimilar market share based on standardized administration volume.
We graphed annual originator and biosimilar prices and biosimilar market share by product class. Next, we calculated annual total spending change by product class and decomposed this into changes in originator and biosimilar observed prices, biosimilar market share, and overall volume using the Congressional Budget Office’s decomposition method of physician service spending (eMethods in the Supplement).5 No statistical tests were used because the Part B National Summary Data Files use all Medicare Part B claims.
This study was deemed exempt by the institutional review board at Weill Cornell Medical College. We followed the Strengthening the Reporting of Observational Studies in Epidemiology (STROBE) reporting guidelines for cross-sectional studies.
Between 2013 and a product’s first biosimilar launch, originator prices rose 20%, 52%, and 17% for infliximab, pegfilgrastim, and epoetin alfa, respectively, but were stable for filgrastim (Figure). After biosimilar launch, originator filgrastim and pegfilgrastim prices remained stable, while originator prices declined for infliximab and epoetin alfa. When they launched, biosimilar prices entered at levels comparable with originator prices, then declined by 37%, 24%, 6%, and 11% for filgrastim, infliximab, pegfilgrastim, and epoetin alfa, respectively, by 2019. Biosimilar market share by the end of 2019 varied substantially across product categories; filgrastim, infliximab, pegfilgrastim, and epoetin alfa biosimilar market share were 75%, 9%, 17%, and 19%, respectively.
The Table5 summarizes changes in total spending. Prior to biosimilar launch, filgrastim annual total spending declined by 9%, driven primarily by volume declines, while changes in annual total spending for infliximab, pegfilgrastim, and epoetin alfa were nominal because volume declines were offset by price increases. After biosimilar launch, total spending declined annually in all product categories (average annual decline was 13% for filgrastim and epoetin alfa, 7% for infliximab, and 1% for pegfilgrastim). About half of the declines were driven by volume for epoetin alfa and filgrastim; other declines corresponded to pricing and market share trends (Figure).
There is controversy over whether biosimilars effectively create savings for US payers.6 In this cross-sectional study, we found initially modest, though growing, Medicare spending declines after biosimilar launches. However, a limitation of this study is that biosimilar launches are still too recent to know if these declines will persist. Declines in Medicare spending after biosimilar entry came from a range of sources: biosimilar prices and market share drove filgrastim declines, originator prices drove infliximab and epoetin alfa declines, and biosimilar market share drove pegfilgrastim declines. Originator products that treat chronic conditions appear to decrease prices to maintain market share, whereas filgrastim, an acute-condition medication, maintained prices. Future work should evaluate these trends in more recent biosimilar launches.
Accepted for Publication: July 22, 2021.
Published: September 17, 2021. doi:10.1001/jamahealthforum.2021.2634
Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2021 Dean EB et al. JAMA Health Forum.
Corresponding Author: Amelia M. Bond, PhD, Division of Health Policy and Economics, Department of Population Health Sciences, Weill Cornell Medical College, 402 E 67th St, New York, NY 10065 (amb2036@med.cornell.edu).
Author Contributions: Profs Dean and Bond had full access to all of the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis.
Concept and design: All authors.
Acquisition, analysis, or interpretation of data: All authors.
Drafting of the manuscript: All authors.
Critical revision of the manuscript for important intellectual content: All authors.
Statistical analysis: All authors.
Obtained funding: All authors.
Administrative, technical, or material support: Dean.
Conflict of Interest Disclosures: Prof Dean reported grants from Arnold Ventures during the conduct of the study and grants from the Commonwealth Fund outside the submitted work. Prof Bond reported grants from Arnold Ventures during the conduct of the study and grants from the Commonwealth Fund, the Physicians Foundation Center for the Study of Physician Practice and Leadership at Weill Cornell Medicine, and Arnold Ventures outside the submitted work.
Funding/Support: This work was supported by Arnold Ventures.
Role of the Funder/Sponsor: Arnold Ventures had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.