Can Biosimilar Competition Drive Down OOP Costs? For Some, Yes
By Angela Maas
Many industry experts have touted the promise of biosimilars to bring down patients’ out-of-pocket (OOP) costs. A new study finds that this may very well be true for Medicare Advantage (MA) beneficiaries, a finding that contrasts with a similar study of commercially insured beneficiaries.
For the article, which was published Jan. 15 in JAMA Network Open, researchers studied MA claims in Optum’s deidentified national commercial database, Clinformatics Data Mart Database, for beneficiaries using one of seven provider-administered biologics — filgrastim, infliximab, pegfilgrastim, epoetin alfa, bevacizumab (which was excluded for ophthalmic diagnosis codes), rituximab and trastuzumab — from 2009 to 2022. Each of the agents had a minimum of four years of data before biosimilar competition and three years after.
Results included 273,774 patient-years. The mean age was 76, 57.6% of patients were female, 53.4% were treating cancer with biologics, 49.7% had biologics administered in outpatient clinics or offices, and 13.0% of patients received biosimilars. Of those, 11.1% received only biosimilars, while 1.9% received both biosimilars and brand-name drugs.
Slightly more than half of the patients — 52.2% — paid coinsurance or deductibles, which are directly tied to the cost of the drug, while 5.2% paid copayments only, and 40.8% had no OOP costs.
The mean annual OOP costs for the drugs in the study declined by $94 after they faced biosimilar competition, dropping from $233 in the year before competition to $165 four years after competitors became available. All seven drugs had lower annual costs, and the greater cost decreases were found in patients responsible for coinsurance or deductibles compared with those responsible for copayments only.
“This cross-sectional study found that biosimilar competition was associated with lower OOP spending for Medicare patients, likely because many patients paid a percentage of drug costs,” concluded the authors.
Commercially Insured Had Different Findings
A study published March 29, 2024, in JAMA Health Forum, however, found that biosimilar competition for the same seven biologics in the current study did not bring down OOP spending for commercially insured patients.
Commercial insurers vary in their reimbursement for provider-administered biologics and sometimes will reimburse clinics and hospitals at a price three or four times higher than that of the drug. Because patient OOP costs are based on this reimbursement, even if competition pushed down drug prices, that wouldn’t bring down OOP costs.
In contrast, Medicare reimburses these drugs based on average sales price, so lower ASPs “could directly translate to lower OOP spending for those with Medicare,” write the authors. “Understanding whether biosimilar competition lowers OOP spending for patients with Medicare may offer insights into whether competition has improved access to biologic medications, which could lead to improved adherence and patient outcomes.”
Several studies have found that Medicare beneficiaries forgo filling prescriptions for high-cost specialty drugs. But when biosimilars can reduce these patients’ OOP costs, the agents can help counter that trend.