News Release
Biosimilar Medications Could Create Billions in Health Care Savings
Nov 3, 2014
The U.S. Food and Drug Administration is expected to release final regulations outlining lower-cost approval pathway requirements for so-called biosimilar drugs. The introduction of biosimilars is expected to reduce prices. This Perspective combines prior research and recent data to estimate cost savings in the U.S. market. We predict that biosimilars will lead to a $44.2 billion reduction in direct spending on biologic drugs from 2014 to 2024.
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The U.S. Food and Drug Administration (FDA) is expected to release final regulations outlining lower-cost approval pathway requirements for so-called biosimilar drugs. The introduction of biosimilars is expected to reduce prices, albeit to a lesser degree than small-molecule generics. This Perspective combines prior research and recent data to estimate cost savings in the U.S. market. We predict that biosimilars will lead to a $44.2 billion reduction in direct spending on biologic drugs from 2014 to 2024, or about 4 percent of total biologic spending over the same period, with a range of $13 billion to $66 billion. While our estimate uses recent data and transparent assumptions, we caution that actual savings will hinge on the specifics of the final FDA regulations and on the level of competition.
Biosimilars are expected to increase competition and drive down prices, though not as dramatically as less-complex generic drugs did when they entered the market in the 1980s.
This research was sponsored by Sandoz, a Novartis Company, and conducted within RAND Health, a division of the RAND Corporation.
This publication is part of the RAND Corporation Perspective series. RAND Perspectives present expert insights on timely policy issues. All RAND Perspectives undergo peer review to ensure high standards for quality and objectivity.
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