Biosimilars Were Supposed to Lower Costs. So Why Aren’t They?

Biosimilars were supposed to be one of the clearest wins in pharmacy.

Biologics are complex, life-changing medications used to treat conditions like autoimmune disease and cancer, but they come with eye-watering price tags. The entire promise of biosimilars was simple, once patents expire, competition enters the market, prices fall, and plan sponsors finally get relief.

That’s the theory. In practice, many employers are still paying far more than they should, and most don’t realize why.

The Problem Isn’t Biosimilars, It’s Incentives

On paper, biosimilars exist. There are multiple FDA-approved alternatives for products like adalimumab and ustekinumab. Competition should be working. But pharmacy benefit managers don’t operate in a neutral marketplace.

Legacy PBMs are no longer just administrators. They’re vertically integrated organizations with ownership or financial ties across insurance, PBM operations, drug labeling, and dispensing. That structure fundamentally changes incentives.

When a PBM owns or controls a “private-label” biosimilar, it isn’t motivated to find the lowest cost option in the market. It’s motivated to steer utilization toward the product that generates the most margin inside its own ecosystem.

That distinction matters more than most contracts let on.

“Lower Than Brand” Is a Very Low Bar

Employers are often told, “Don’t worry, this biosimilar is cheaper than the brand.”

That statement can be technically true and still deeply misleading.

If the reference point is an already inflated brand price, almost anything looks like savings. What actually matters is how that price compares to the lowest net acquisition cost available in the market, not the discount off a list price that the PBM helped define.

When PBMs set or influence the pricing of their own white-label products, the starting point becomes part of the profit strategy. Discounts and guarantees can be met on paper while total spend quietly remains far higher than it needs to be.

How This Adds Up for Real Plans

These pricing decisions aren’t abstract.

Even modest utilization of biologics can translate into hundreds of fills per year for a mid-sized employer. When each fill is priced thousands of dollars higher than comparable alternatives, the excess cost compounds quickly.

And while rebates may eventually reduce reported net cost, plans are still fronting inflated prices throughout the year. In many cases, even after rebates are applied, the plan is still paying materially more than if the PBM had simply sourced the lowest-cost biosimilar available from the start.

That gap doesn’t disappear, it just gets harder to see.

Transparency Isn’t a Buzzword Here

This is where the PBM conversation needs to shift.

Asking about “discounts off AWP” or “rebate guarantees” misses the point entirely when the underlying price is manipulated. The better questions are more uncomfortable:

• Who sets the price of the biosimilar you’re recommending?

• What is the verifiable acquisition cost?

• How does that cost compare to all other available biosimilars, not just the brand?

• Are you financially indifferent to which product the member uses?

If a PBM can’t clearly answer those questions, that’s not complexity, it’s misalignment.

What Alignment Actually Looks Like

A PBM that operates on a flat, transparent administrative fee has a very different incentive structure. If revenue isn’t tied to drug price, spread, or label ownership, the PBM wins only when the plan spends less.

That doesn’t mean biosimilars are automatically cheap. It means someone is actually motivated to find the cheapest clinically appropriate option and pass that cost through directly.

That’s how biosimilars were supposed to work in the first place.

The Bottom Line

Biosimilars still represent a real opportunity for cost containment, but only if plan sponsors look beyond surface-level discounts and ask harder questions about incentives. When PBMs profit from higher prices, savings become theoretical. When PBMs profit from transparency, savings become real.

The difference isn’t the drug. It’s the business model behind it.