Milliman predicts that it will be at least 12 years before biosimilars fully penetrate the market in the United States. But the consulting company tells employers that the U.S. market could possibly evolve the same way that it has in Europe, where biosimilars have a healthy presence. Milliman recently updated its 2011 study—“Understanding Biosimilars and Projecting the Cost Savings to Employers”—in order to let U.S. businesses know just how biosimilars might impact their health care costs from 2013 to 2019.
The study points out that the Biologics Price Competition and Innovation Act of 2009 (BPCIA) mandates a 12-year exclusivity period for many new biologic drugs. However, since over 70% of the 2013 cost for biologics is for drugs whose 12-year exclusivity has already expired, this should not be a major barrier. Rather, “the approval pathway and return on investment are not necessarily appealing for all biologics or specific drug therapy classes,” the study states…. “As such, biosimilar penetration in the market over the next several years will be small.”
Frank Kopenski, Jr., a principal and consulting actuary at Milliman and the study’s main author, tells Managed Care that “the U.S. trails Europe by about five to six years in the approval process.”
He explains that, “If an employer with 10,000 insured employees and dependents spends on average $51.4 million on health care, the expected cost for biologics is $2.67 million or 5.2% which is the maximum savings potential if biosimilars were available at no cost.”
Kopenski says that, “A 30% discount for biosimilars would represent roughly $800,000 savings or 1.6%. Over time, the introduction of new biologics will work against the percentage savings since newer drugs will have patent protection into the foreseeable future. However, the volume of biosimilars in the market will move toward where Europe is today.”