Biosimilars set to surge as biologic patents expire

Payment models limit uptake

Despite clear cost advantages and therapeutic equivalency, biosimilars face sluggish uptake in certain provider settings, particularly in physician-administered markets like oncology and rheumatology. One of the biggest barriers is the way physicians are reimbursed under Medicare Part B.

"Many physicians are reimbursed based on the average sales price of a product," Callahan explained. "If a biosimilar has a lower price, the physician would receive a corresponding lower reimbursement -- lowering the incentive to prescribe biosimilars."

To mitigate this disincentive, the Inflation Reduction Act included a temporary boost to Medicare's reimbursement for biosimilars. From 2022 through the end of 2027, biosimilars that are "highly similar" to their reference biologics and meet certain regulatory criteria are reimbursed at 100% of their own average sales price plus 8% of the reference product's average sale price, an increase from the previous 6%.

While that change is a step in the right direction, stakeholders say more work is needed to address adoption inertia, especially in areas where reference biologics still dominate formularies and provider preference. As of Q1 2025, biosimilar versions of adalimumab (the active ingredient in Humira) accounted for just 2% of U.S. prescriptions despite multiple launches in 2023, according to data from IQVIA.

PBM integration intensifies cost pressures

Now that clinical parity is established, biosimilars compete largely on price. Some have entered the market at discounts of up to 85% off the wholesale acquisition cost of their branded counterparts. This level of price-cutting is unique to the generic drug market but is virtually unheard of in other segments.

"There is no consensus on biosimilar approaches in pricing," Callahan admitted. "Strategies heavily rely on research and analysis to understand key market dynamics and identify pricing sensitivities," meaning many manufacturers must walk a tightrope by offering steep discounts to gain traction while still recovering the high development costs of manufacturing biologics.

Meanwhile, PBMs have emerged as powerful gatekeepers. Through vertical integration with insurers and pharmacy arms, large PBMs are now steering market share toward their own private-label biosimilars.

Callahan pointed out examples like Quallent (backed by Cigna and Express Scripts) and Nuvaila (backed by UnitedHealthcare and Optum Rx), where payers are aligning incentives across their own subsidiaries to favor in-house biosimilar products.

"Each year, there is a growing trend of vertical integration among PBMs and health plans, allowing them to steer physicians toward their own biosimilars through preferential coverage," Callahan reiterated.

The lack of transparency in PBM rebates and formulary placement further complicates biosimilar competition. Manufacturers offering significant discounts might still be excluded from preferred tier coverage if those savings aren’t passed on to the plan sponsor or beneficiary.

Oncology dominates near-term market opportunity

While biosimilars exist across many therapeutic areas, oncology remains the single largest commercial opportunity as dozens of top-selling cancer therapies are nearing patent expiration by 2030, including Avastin, Herceptin and Keytruda.

"The top sales of the oncology biologics losing exclusivity in the next five years represent about $46.5 billion, about a third of the total opportunity," Callahan stated. Because many of these drugs are delivered via infusion therapy, they are ideal for biosimilar substitution in hospital and clinic settings.

The oncology biosimilars segment is expected to grow at an even faster rate than the broader market -- rising from $6.8 billion in 2024 to over $21 billion by 2030. But, that success largely hinges on provider confidence, payer incentives and continued regulatory clarity.

Originator companies mount aggressive defense strategies

Branded manufacturers are not idly standing by. Instead, many are using a familiar playbook to extend market dominance that includes tactics like litigation, contracting and product switching.

According to Callahan, originators often "employ one or several of these tactics to retain sales and market share for as long as possible." However, those strategies can have a chilling effect on biosimilar adoption.

Some companies cut prices dramatically just before biosimilar launch, while others offer bundling deals across multiple therapies that effectively lock health systems into broader contracts. Others shift patients to next-generation therapies with new patent protection before biosimilars arrive, reducing the demand for the biosimilar version of the original product.

Still, policy experts and lawmakers continue to debate whether these defensive strategies amount to anticompetitive behavior or are legitimate business practices within the bounds of current law. Either way, their impact on biosimilar market share is not going unnoticed.

Looking ahead

Ultimately, the near-term success of biosimilars in the U.S. may depend less on regulators and more on the strategic decisions of the originator companies.

"The key signals the industry should be watching to gauge whether the U.S. biosimilar market is on track to deliver on its growth potential largely fall on the manufacturers of the originator biologics up for losing exclusivity," Callahan added.

With close to 100 biologics projected to lose exclusivity through 2030, and multiple high-stakes therapeutic areas in the mix, the biosimilar industry is expected to flourish. But unlocking that potential growth requires policy alignment, pricing transparency and structural reform in areas like PBM contracting and provider reimbursement.

Alivia Kaylor is a scientist and the senior site editor of Pharma Life Sciences.