Drug price growth will slow next year as biosimilars are expected to curb the price of the world’s best-selling drug, a report found.
Pharmaceutical prices are projected to increase 3.26% in 2023, marking a steep decline from the 6% price hike in 2017, according to the group purchasing organization Vizient, which forecasts what its member hospitals and health systems might pay for drugs after discounts and rebates. Vizient predicted a 3.3% increase last year; the actual price change was 2.8%. The 2017 spike was the highest in the last five years.
Humira, AbbVie’s rheumatoid arthritis biologic that is the highest-grossing drug of all time, has been the largest contributor to drug price inflation. A year-long treatment can cost more than $84,000, a price that has ballooned 470% since the drug was introduced about 20 years ago, a congressional investigation found. There are seven Humira biosimilars approved and more on the way, said Steven Lucio, senior principal of pharmacy solutions at Vizient.
Hospitals’ pharmaceutical spending will continue to moderately grow, in large part thanks to new biosimilars coming to market, he said.
The price of vasopressin, which is used to treat diabetes, will continue to fall after generic alternatives came to market earlier this year at one-third of the wholesale acquisition cost, the report shows.
Even though more generic drugs and biosimilars will be available next year, that doesn’t necessarily mean they will be used, experts warned.
Biologic drug manufacturers have heavily discounted the price to payers and offered coupons to patients to lower out-of-pocket costs, effectively eliminating any cost incentives to purchase biosimilars, according to a report published last year from NORC at the University of Chicago, a social research organization.
The Food and Drug Administration has approved three dozen biosimilars, but their development and adoption have been delayed by drug manufacturer’s patent litigation for new indications, FDA approval delays, their formulary positions as well as some hesitancy from physicians and patients to change treatment paths.
Around three-quarters of physicians see biosimilars as equally safe and effective as their corresponding biologic and 71% of patients are willing to take them with a doctor’s recommendation, according to a 2021 NORC survey of more than 1,200 doctors and patients.
When the Humira biosimilars come to market next year, the Centers for Medicare and Medicaid Services needs to quickly add them to Medicare Part D formularies, said Julie Reed, executive director of Biosimilars Forum, a not-for-profit biosimilars advocacy group.
“The Biden administration, Congress and federal regulators need to ensure these biosimilars are available to all Medicare patients,” she said.
Biosimilars can significantly reduce Medicare costs and beneficiaries’ out-of-pocket expenses if their use becomes more widespread, particularly with the expected launches of biosimilars for Humira and rheumatoid arthritis biologic Enbrel, HHS’ Office of Inspector General said in a March report.
In 2019, Medicare Part D spending on biologics with available biosimilars could have decreased by $84 million, or 18%, if all biosimilars had been used as frequently as the most-used biosimilars, the inspector general found. Beneficiaries’ out-of-pocket costs could have decreased by $1.8 million, or 12%.