New Economic Report Demonstrates How Biosimilar Competition Lowers Prices
Harvard Researchers Suggest Robust Policies Are Needed to Increase Competition Further
WASHINGTON, D.C. – A new report published in the National Bureau of Economic Research by leading Harvard University and Harvard Medical School health care researchers demonstrates how competition from biosimilars is driving down the cost of all biologics in a drug class, including the brand originator biologic. The economic analysis studied the launch of biosimilars for seven brand-name biologic products to evaluate the impact on prices. The research shows that each biosimilar entering the market brings down weighted average price ratios by up to 10 percentage points.
Compared to the small molecule market, the biosimilar market is still emerging, yet it is clear that competition from biosimilars lowers prices,” said lead study author Richard G. Frank, PhD, Margaret T. Morris Professor of Health Economics, Department of Health Care Policy, Harvard Medical School. “As the number of biosimilars increase, the competitive forces yield important drug price reductions. However, the current market frictions that are slowing down the evolution of biosimilar competition point to the need for policy measures to facilitate more robust competition.
Competition from biosimilars lowers prices and improves patient choice and access to lifechanging treatments. The savings potential from biosimilars is also how the U.S. can address the biggest driver of prescription drug spending,” said Meaghan Rose Smith, Executive Director of the Biosimilars Forum. “Unfortunately, anti-competitive games and backwards incentives are creating barriers to these savings and limiting a thriving biosimilars market. That’s why we need to work with policymakers to realize the billions of dollars in health care savings biosimilars can bring to employers, taxpayers and patients.