To understand biosimilars, you first have to know what a biologic drug is. These are a type of specialty drug (a costly prescription medication used to treat complex chronic conditions) that is made using living organisms. This can involve animal or plant cells, bacteria, yeast, proteins, and other similar biological materials. Typically more complex than drugs—which are essentially just a combination of chemicals—biologics are more complicated to manufacture and come with a much higher price tag.
Ever since biologics began to hit the market in the 1980s, consumers have found a way to pay that higher price, because biologic medications consistently target serious and complex conditions such as cancer and diabetes. According to the FDA, biologics are the fastest-growing class of medications in the United States, meaning they’re also a large contributor to the skyrocketing cost of healthcare.
The prohibitively high cost of biologic medications is increasingly problematic; we’ve all seen news stories and heard anecdotes of diabetics struggling to afford their life-saving insulin. This is where biosimilars come in. A biosimilar is a drug with active properties that mimic its biologic counterpart. The FDA rigorously vets biosimilars to ensure that they hold the same benefits as the biologic. Though the biosimilar may or may not be considered interchangeable with its original, they are just as safe and effective, similar to generic versions of brand-name drugs.
The main advantage of biosimilars is the cost: they are generally much more affordable than the biologic version. According to the American Cancer Society, Biosimilars typically cost 10% to 50% less than their brand-name biologics, and some estimates suggest that biosimilars could reduce healthcare costs by billions of dollars in the coming years.
From a slow and steady start to a sudden acceleration, the trajectory of biosimilars has changed—and according to current projections, will continue on an upward path. Previous slow uptake and lower than expected savings have raised questions about how successful biosimilars would be for stakeholders. Our analyses suggest we have reached an inflection point, with recent and predicted events indicating biosimilars may offer substantial savings.
Between 2015 (the first biosimilar to reach the US) and 2022, the FDA approved 40 biosimilar medications, and approximately 64% of the biologic market is potentially open to biosimilar competition. By most estimates, the biosimilar market is just getting started; one estimate predicts a $10 billion increase by 2027, which could bring with it close to $100 billion in savings.
