Biosimilars: When Lower-Cost Medications Mean Lower Provider Profits

John Reddan, MBA, Jason Moore, MBA, Eric Snyder, Ph.D., and Zi Yang, Ph.D. via a Navigant Study

With a global market forecast to reach $30 billion by 2020, and multiple products slated to be introduced in the near future, biosimilars of market-leading therapeutics are a reality in the U.S. and beyond. Yet, a new analysis suggests today’s biosimilar reimbursement model could be a major obstacle to broad adoption.

According to a Navigant study, en masse adoption of biosimilar alternatives to a single innovator brand such as Remicade could decrease annual profits by as much as $100 million across physician offices and 340B and outpatient hospital infusion suites nationwide. Why? While Medicare offers a differential reimbursement model that’s higher for biosimilars, commercial payers do not, leading to reduced profits for most providers.

Though it may be possible for insurers to influence biosimilar uptake through restrictive formularies and benefit design, getting providers on board will require longer-term commercial reimbursement models that align hospital and physician incentives with those of the payer.

 

Payer Savings by Incenting Biosimilar Uptake with Differential Reimbursement

 

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