PRI analysis suggests billions in savings via biosimilars

SACRAMENTO, Calif. — State employee health plans could save up to $1.8 billion annually by expanding the use of lower-cost biosimilar medicines, according to a new study released Tuesday by the Center for Medical Economics and Innovation at the Pacific Research Institute.

The report, The Biosimilar Savings Opportunity: Prioritizing Biosimilars Will Generate Significant Savings for State Employee Health Plans, estimates that state health plans spent about $20 billion on originator biologic medicines in 2024. By expanding biosimilar use where available, the study projects annual savings ranging from nearly $900 million under a conservative adoption scenario to almost $1.8 billion under a more aggressive approach.

Click to download the study, The Biosimilar Savings Opportunity: Prioritizing Biosimilars Will Generate Significant Savings for State Employee Health Plans

“States are looking everywhere for ways to control costs without cutting services or reducing benefits,” said Dr. Wayne Winegarden, director of the Center for Medical Economics and Innovation and author of the study. “Prioritizing biosimilars is one of the rare policy opportunities that benefits everyone. Taxpayers save money, state budgets become more sustainable, and employees get access to effective treatments they need.”

Biologics are used to treat conditions such as cancer, rheumatoid arthritis, Crohn’s disease, psoriasis, and other autoimmune disorders. Biosimilars are highly similar versions of these medicines that become available after patents expire, offering lower-cost treatment options while meeting the same standards for safety and clinical effectiveness.

According to the study, biosimilars have generated more than $56 billion in nationwide savings since entering the U.S. market. However, the report argues that many state employee health plans have not yet fully prioritized their use, limiting potential savings for taxpayers.

California could save up to $179 million annually under the study’s higher-adoption scenario, while Texas, Florida, and New York could each save more than $100 million per year.

The report also notes that some biosimilars are priced 75% to 90% lower than their reference biologics in certain therapeutic categories, with additional savings expected as more than 100 biologic medicines lose patent protection over the next decade.

“With more than 100 biologic medicines expected to lose patent protection over the next decade, the opportunity for additional savings will only grow,” Winegarden said. “States that embrace biosimilar competition now can improve the long-term fiscal health of their employee health plans while preserving access to high-quality care.”