Biologics and biosimilars: Can they affect specialty pharmacy spending?

Biologics are used to treat less common and more complex conditions such as rheumatoid arthritis, inflammatory bowel disease, cystic fibrosis, psoriasis, hepatitis and cancer. A biosimilar is a biologic that is similar to an already-approved, original biologic by the Food and Drug Administration (FDA). The pivotal difference between a traditional drug and a biologic drug is the production method. While traditional drugs are made with chemicals, biologic drugs are made with living cells so they cannot be exact replicas of the original drug. This is why we use the term biosimilar instead of the familiar term “generic” when we talk about an approved alternative to the original.

With a traditional generic, once there are multiple competing manufacturers producing the generic, the price begins to drop, and over time, it can fall quite low. The production method for biosimilars, however, will be a factor in the number of manufacturers and the cost. Physicians and patients may be cautious about transitioning to a biosimilar from the original biologic if there is little difference in price.

In 2016, specialty cost was 34 percent of total drug expenditures, and it is predicted specialty drugs will represent 50 percent of plan spend by 2020. Drug development resources are increasingly moving to biologics and more biosimilars will emerge, but it is not certain that the biosimilars will provide significant cost savings or be readily adopted by practitioners.

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Publishing credit: Content provided by Integrated Health Concepts, LLC.