Biosimilar Adoption: Why Low Uptake is Still a Challenge

When biosimilars first hit the U.S. market in 2015, they promised a new era of competition, affordability, and access in the world of specialty medications. These FDA-approved treatments feature the same safety and effectiveness as their originator biologic - but often at a lower cost. Seems like an easy win for employers looking to reduce pharmacy spend, right? So why, nearly a decade later, is biosimilar adoption still lagging?

Despite their potential, biosimilars face several barriers, ranging from pharmacy benefit manager (PBM) formulary decisions, to regulatory hurdles, to patient and provider hesitancy - all of which lead to employers and their members having to bear the financial burden.

Let’s take a closer look at why biosimilar uptake remains low and what employers can do to turn the tide and take advantage of the significant cost-savings that these treatments offer.

Understanding Biosimilars

Let’s start with the basics. Biosimilars are FDA-approved drugs that are highly similar to existing biologic medications (often referred to as “reference products” or “originator product”) and have no meaningful clinical differences in terms of safety, strength, or efficacy. Think of them as the biologic version of a generic drug - however, since they are derived from living organisms, they are only similar and not identical to the originator product.

According to the JAMA Health Forum, biosimilars are generally priced 15% to 35% lower than their reference biologics. As more biosimilars enter the market, those savings can potentially grow. For employers, that could mean lower specialty drug costs - especially in regards to more expensive treatments like cancer and Crohn’s disease.

Barriers to Uptake: PBM Practices and Formulary Design

One of the biggest and most overlooked barriers to biosimilar adoption is the way many legacy PBMs manage their formularies. While some PBMs exclude biosimilars or place them on higher tiers with higher out-of-pocket costs, we often see preferred biosimilars placed at parity with the higher cost reference product, but without the necessary member incentives to encourage the shift to the lower-cost option.

These practices that drive up costs are only made easier by vertical integration, where legacy PBMs control not just the benefit design, but also the pharmacies and, in some cases, the drug manufacturer. This consolidation allows PBMs to manipulate the market in ways that benefit their own bottom line, including launching biosimilars under their own labels. These private label biosimilars might appear to offer innovation or savings, but in reality, they obscure true pricing while reducing market competition. For employers this can mean higher costs and limited visibility into whether they’re actually getting a good price. 

Provider and Patient-Level Friction

Even when biosimilars are available, getting providers and patients to switch can be a challenge. Some physicians may hesitate to prescribe biosimilars due to outdated perceptions, lack of experience, or concern over switching stable patients. Others may be slowed down by administrative barriers such as prior authorizations or step therapy requirements that aren’t ideal or may have to guess which biosimilar product is covered on the formulary.

Patients, meanwhile, might worry that a biosimilar isn’t “as good” or work the same as the brand-name drug they’ve been on for years. And if the biosimilar has a similar or potentially higher copay due to formulary placement, there’s little incentive to switch. This can lead to underutilization - despite comparable outcomes and cost-savings.

Regulatory and Policy Limitations

Biosimilar regulations and adoption pathways are still evolving, and that uncertainty can create real barriers to access and cost savings. While biosimilars are FDA-approved and have no clinical  meaningful differences to their reference biologics, navigating the regulatory landscape remains a challenge.  

At the federal level, the FDA has created a designation called interchangeability, which allows certain biosimilars to be substituted at the pharmacy without a doctor’s intervention or prior approval, in most states. However, this designation requires manufacturers to conduct additional switching studies beyond the standard biosimilar approval process, which can be both costly and time-consuming (though this may change soon). As a result:

• Very few biosimilars have achieved interchangeability status, limiting pharmacy-level substitution and slowing adoption.
  
  
  

• Manufacturers may be discouraged from pursuing interchangeability, especially for lower-volume therapies, due to the high cost and uncertain ROI.

State laws also vary when it comes to substitution. Some states are more permissive, while others impose layers of regulatory oversight that complicate biosimilar access at the pharmacy counter.

• Some states require pharmacists to notify prescribers before dispensing a biosimilar, adding an extra administrative step that can delay treatment and discourage biosimilar use altogether.
  
  
  

• Others mandate additional documentation or patient consent, which increases workload for pharmacy staff and can cause confusion or hesitation among patients, particularly those unfamiliar with biosimilars.

On top of that, exclusivity periods granted to brand-name biologics often delay biosimilar market entry, sometimes for years after FDA approval, prolonging high costs for employers and limiting competitive options in the marketplace.

• Biologics can enjoy up to 12 years of exclusivity, meaning biosimilars must wait years before competing—even if they’ve already been proven safe and effective.
  
  
  

• First Biosimilar Exclusivity: Similar to generics, there's typically an additional 180-day exclusivity period granted to the first biosimilar to launch. This means even after the brand exclusivity expires, full biosimilar competition can be delayed. For example, Amjevita was on the market for six months before other Humira biosimilars could release.
  
  
  

• Post-approval litigation or “evergreening” strategies can further extend exclusivity, allowing brand manufacturers to maintain high prices by blocking competition, ultimately driving up costs for employers and limiting access to more affordable alternatives.

What Employers Can Do to Promote Biosimilar Adoption

Biosimilars present an opportunity for employers to significantly reduce prescription drug costs while maintaining high standards of care, but barriers such as PBM rebate incentives, patient and provider hesitancy, and regulatory barriers, biosimilar adoption has lagged behind expectations.

Here’s the good news: employers have more influence than they might think. By choosing the right PBM partner, employers can address these barriers head-on and unlock significant savings. If your PBM isn’t already prioritizing biosimilars, it’s time to ask why? Are biosimilars excluded from your formulary? Are there two versions of the same drug at different prices? Is your PBM not transparent about what you’re paying and why? If you answered ‘yes’ to any of these questions it might be time to re-evaluate your pharmacy benefits strategy and consider switching to a modern, transparent PBM.

At SmithRx, we believe in transparency, clinical alignment, and helping our clients save on their pharmacy benefits by ensuring access to cost-effective treatments. That’s why we’ve built our model to help employers promote biosimilar access, educate their members, and reduce spend without sacrificing quality.

Our Connect 360 offering proactively identifies lower-cost treatments - including biosimilars - and supports members through seamless transitions. In 2024, we helped our clients save $200 million, thanks in part to successful transitions in high-cost areas like autoimmune conditions and multiple sclerosis (MS). Our connect program continues to expand, with the recent addition of Stelara biosimilars to our autoimmune program, allowing employers to stay ahead of the curve when it comes to biosimilar adoption.

As SmithRx Founder and CEO Jake Frenz notes in his Forbes article, “By demanding transparency and supporting competition, organizations can help remove the barriers that stifle biosimilar innovation. This could lead to a more dynamic marketplace where new, cost-effective therapies can flourish - one that drives a future where breakthrough treatments are accessible and affordable for all.” 

Ready to start exploring new ways to save? Connect with a SmithRx representative and see how partnering with a transparent PBM can do for your organization.