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Pricing & Contracting

Driving value in the era of biosimilars - What payers & manufacturers can do to support employers

Posted by on 14 October 2020
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The pace of biosimilar adoption in the US is in no small part due to the complexities and misaligned incentives within our healthcare system. These complexities, misaligned incentives, and barriers to biosimilar adoption are illuminated in several other articles.[1,2,3] One study reported that biosimilars could save companies over $1.53 million resulting in increased access to affordable medications for employees.[4] Employers are a key stakeholder in our healthcare system with a significant proportion of Americans being covered by employer sponsored health plans.[5] 

The increasing costs for employers to sponsor health benefits and the downstream impact on benefit costs to employees compels employers to enact cost savings strategies. Ultimately, employers are looking for any opportunity that saves costs irrespective if that opportunity lies with a biosimilar or a branded product. Managed care organizations and pharmacy benefit managers are instrumental in an employer’s ability to provide affordable access to medications for their employees. These intermediaries work on behalf of their employer clients to bring forth the best cost savings strategies which may or may not include biosimilars.

Payer and manufacturer opportunities to increase the overall value in competitive categories, are not dissimilar. Both stakeholders are working towards a common goal of increasing affordability and access to necessary therapies. There is a gap in education from both a provider and patient/member perspective. Educating providers and members on the available evidence for different products in biosimilar categories as well as the potential savings derived from competition can improve demand and uptake.

Manufacturers and payers can support employers and providers with educational outreach to members/patients through tactics like websites, social media, letters, podcasts, virtual booth at conferences, videos, and virtual presentations. Using multichannel communication can exponentially increase reach. Programs developed collaboratively (payer, manufacturer, advocacy, etc.) insure the same messaging is being delivered to stakeholders and avoids confusion and mistrust. Patient/member incentives that support the lowest cost option can be an effective tool for increasing demand. Payers and manufacturers alike may support policies or programs that incent patients to begin therapy or transition to agents that have been identified as clinically efficacious and safe but also are of lower cost to the system.

Reinforcing the safety, efficacy, and cost savings are essential patient messages. Contracting is another opportunity for collaboration between payers and manufacturers that can reinforce their value to employers. Manufacturers and payers should work together to align on the specifics of value-based contracting options that are easy to track and report that go beyond straight volume or rebate requirements.

Biosimilars have brought additional competition to categories that have been high cost to employers and payers will need to guide their clients towards a low net cost strategy which relies on a competitive marketplace. Signal to the industry support of a strategy valuing clinical data and low net cost that has been identified as the best value by developing a formulary with the use of analytics, contracting, and collaboration to broadly reinforce that value. Beyond formulary and benefit design (which big employers can ultimately override), payers should engage in provider reimbursement strategies that incentivize the use of high value agents while maintaining provider revenue.

Should manufacturers and payers not make meaningful progress on decreasing overall costs, frustrated employers will do this for them. Already several major employer groups such as National Alliance of Healthcare Purchaser Coalitions, the Pacific Business Group on Health and the ERISA Industry Council recently developed the Employers Prescription for Affordable Drugs initiative, which seeks to drive legislation promoting transparency, competition and value. This new “partnership” claims to represents 153 million employer plan lives and is pushing the “Preserve Access to Affordable Generics and Biosimilars Act”, which targets pay-for-delay and other anti-competitive tactics.

Manufacturers should understand and adopt pricing strategies that increase the likelihood of share shift to lowest cost agent. Generally speaking as it pertains to biosimilars, payers and employers are looking for a meaningful cost reduction (20% to 40%) from the reference product.

Ultimately the success of reducing cost in categories with biosimilars in the US will depend on all stakeholders (payers, employers, providers, manufacturers and patients) working together to improve patient outcomes while decreasing costs to our health care system.


  1. Accessed 9/30/20
  2. Accessed 9/30/20
  3.,for%20patients%20with%20chronic%20conditions. Accessed 9/30/20
  4. Accessed 9.30.20
  5. Accessed 9.30.20
  6. Accessed 10/2/20
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