Biosimilar

A biosimilar is the biologic equivalent of a generic drug — a near-identical version of an original biologic medication, approved by the FDA after the original's patent expires. "Near-identical" is the key phrase: biologics are made from living cells and can't be perfectly duplicated the way a small-molecule generic can, but biosimilars must show no clinically meaningful difference in safety, purity, or potency.

The stakes are enormous because biologics dominate specialty-drug spend. Humira, the top-selling biologic in US history, faced its first biosimilars in 2023 after generating over $200 billion in lifetime US sales at $70,000-plus per patient per year. Biosimilars typically launch 15 to 40 percent below the brand price and pull the market down further over time. Uptake has been slower than expected because of formulary contracts, physician familiarity, and PBM rebate dynamics that favored the brand for years. Interchangeability designations from the FDA let some biosimilars be substituted at the pharmacy counter without a new prescription, similar to how generics work.

The takeaway: if you're on a high-cost biologic, ask whether a biosimilar exists and is on your formulary. On self-funded plans especially, switching from brand to biosimilar can save the plan tens of thousands of dollars per member per year.