April 11, 2016

Biologics are among the most expensive drugs available and represent a large and increasing share of U.S. drug spending. Biosimilars, less expensive copies of these highly complex pharmaceuticals, are just beginning to enter the U.S. market, but a robust biosimilars industry that yields maximum benefit for patients is far from certain. Because biosimilar utilization can be significantly facilitated by physicians, the full potential of biosimilars in the United States will be realized more quickly if doctors embrace their use. In light of this, a carefully constructed physician incentive from public and private payors could boost biosimilar utilization significantly, benefitting patients and the health care system as a whole.

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Public and private health care payers have long employed coverage and reimbursement strategies geared toward patients and providers in pursuit of containing costs and improving health care outcomes. In some areas of health care that are less patient‐driven, beneficiary cost may be disconnected from treatment decisions because patients’ financial concerns are not foremost in physicians’ minds when discussing treatment options with patients.

Biosimilar utilization will likely fall into this category. To overcome this disconnect, policymakers and payers should encourage better alignment between patients’ financial concerns and physicians’ approach to presenting treatment options. This would be in keeping with recent payment reforms that reward providers who meet outcome metrics that improve quality and save money.

When a U.S. pathway for biosimilars was established in the Affordable Care Act in 2010, biosimilars were expected to bring substantial savings to the U.S. health care system. These products have been available for nearly a decade in Europe, where biosimilar prices average 10–35 percent lower than reference product prices. However, as time has passed, uncertainty about the robustness of the U.S. biosimilars market has grown. Some experts still predict large biosimilar savings, but others are tempering expectations. Existing policies that have been successful in encouraging generic drug utilization likely will not apply to biosimilars. And previous research conducted found that moderate competition for blockbuster biologics is feasible, but a large number of biologics (and thus a significant share of spending) may escape the positive competitive pressures brought by biosimilars.

Therefore, it is all the more important to implement policies to encourage biosimilar utilization. Policymakers and payers could, in a manner similar to how some payers promote increased generic utilization, encourage physicians to use biosimilars, by rewarding them for doing so. It would, of course, be necessary to construct biosimilar utilization incentives to ensure that they serve their intended purpose. In addition, the legal and ethical implications of incentives would need to be carefully considered. But, considering the cost savings that biosimilars could offer to patients and taxpayers, it is well worth the effort to create well‐crafted incentives.