No one wants to pay more than necessary for prescription drugs. For self-funded groups, biosimilars represent one of the most significant opportunities to reduce pharmacy spend without compromising quality of care. Since they entered the U.S. market in 2015, they’ve generated more than $56 billion in cumulative healthcare savings, including approximately $20.2 billion in 2024 alone.1 But many health plans may not be realizing the full savings opportunity because it takes more than simply having biosimilars available. Many groups assume biosimilar savings happen automatically once lower-cost alternatives become available. In reality, capturing those savings often depends on aligning plan documents with pharmacy benefit administration. To understand why, it helps to first understand what biosimilars are.
What are biosimilars?
Biosimilars are FDA-approved medications that are highly similar to existing biologic drugs, known as reference biologics. Before approval, biosimilars must demonstrate no clinically meaningful differences in safety, purity or effectiveness compared to the reference product. Patients can receive the same expected clinical outcomes—often at a lower cost.
Biologic medications treat many serious conditions, including cancer, autoimmune diseases and rare disorders. One example is Stelara® (ustekinumab), which is commonly prescribed to treat:
- Crohn's disease
- Plaque psoriasis
- Psoriatic arthritis
- Ulcerative colitis
Today, eight FDA-approved ustekinumab biosimilars are available in the U.S. market, creating increased competition and meaningful opportunities for savings. But even when lower-cost biosimilars are available, plans may miss potential savings if plan documents and pharmacy benefit administration aren’t aligned.
How to capture the full biosimilar savings opportunity
1. Review the plan document: Prescription drug provisions should clearly state when a clinically appropriate biosimilar should be used, while allowing for exceptions when the treating physician determines the reference biologic is medically necessary.
2. Review the PBM's formulary and dispensing practices: The pharmacy benefit manager (PBM) should administer the benefit in a way that reflects the plan document. Even well-written plan language may not produce savings if formulary management and dispensing practices don’t support the plan’s intent.
Small changes can create meaningful savings
When plan language and PBM administration work together, self-funded groups are better positioned to:
- Maintain high-quality care for plan members.
- Take advantage of clinically appropriate, lower-cost biosimilars.
- Better manage pharmacy spend.
- Support the long-term financial sustainability of the health plan.
Over the next decade, 118 biologic medications are expected to lose patent protection, representing approximately $232 billion in potential biosimilar market opportunity.2 As biosimilars continue to reshape the pharmacy landscape, reviewing plan documents and PBM administration is a relatively simple step that can help self-funded groups capture meaningful savings while continuing to provide high-quality care. For brokers, it’s another opportunity to help clients maximize the value of every healthcare dollar they spend.
Biosimilars can reduce pharmacy costs—but only if plan design and PBM administration work together.
