Are biosimilars and generics living up to their promise?

The surge in brand-drug use, especially in specialty categories and GLP-1s for diabetes and weight management, has tilted the fill mix heavily toward high-cost brand drugs. This shift, combined with the growing use of niche biologics for rare diseases, can push generic-dispensing rates downward unless mitigated.

At the same time, biosimilar competition is gaining scale, but uptake remains uneven. Although biosimilars can provide significant cost savings, their adoption is often limited by provider preferences, formulary design, PBM practices, and regulatory or operational barriers.

Formulary and benefit design, therefore, play a pivotal role. A biosimilar option is only meaningful if plan design supports its use. That might mean excluding the brand, imposing higher copays for the brand, applying step therapy or preferred-tier positioning for the biosimilar. Without those levers, the availability of a biosimilar won't necessarily translate into savings.

Finally, transparency in pricing is critical. Rebates, spread pricing, and PBM contract terms can make the savings picture more complex. A biosimilar's lower list price doesn't automatically translate to net savings for the plan sponsor unless those savings are properly tracked and verified.

Measuring performance: from opportunity to outcomes

Turning marketplace dynamics into measurable impact requires the right performance indicators. Two key data points offer the most transparent window into whether a plan is realizing the potential savings these drugs promise: generic substitution rate (GSM) and specialty biosimilar substitution rate (SBSR).

GSM quantifies the frequency of use of a generic version is used when one is available. Since it's not influenced by new brand introductions (or vaccine spikes), it helps provide a clean measure of generic-penetration discipline. Many consultants recommend targeting a GSM of 99% or greater.

SBSR is the analog for biosimilars. Once a biosimilar alternative for a biologic exists and is clinically appropriate, the SBSR measures the frequency with which the biosimilar is used instead of the reference product. A high SBSR indicates that a plan is capturing biosimilar value in real-time.

With both metrics, data inputs are also important to vet. For example, how are the numerator and denominator defined? Are vaccines or medical-benefit claims excluded? Are certain drug classes or step-therapy rules factored in or omitted?

Understanding these details ensures that the data accurately reflects true substitution performance before relying on it for decisions.

How to maximize ROI and effectiveness

With these metrics and marketplace realities in mind, here are actionable steps for benefit leaders:

1. Benchmark your metrics and dig in.

• Determine your current GSM: what percent of multi-source brand drugs are being substituted with generics?
• Calculate your SBSR for biosimilar opportunities: among biologic drugs with approved biosimilars, what percent are filled with the biosimilar?
• Ask your PBM or consultant how both GSM and SBSR are defined. Are vaccines, medical-benefit drugs, or certain specialty classes excluded? Clarity on methodology ensures accurate comparisons.
• Compare your results to aspirational targets (for example: GSM > 99%).

• For generics: exclude brands when generics exist, set copays or coinsurance so generics are clearly the value pathway, and apply generic-first step therapy where clinically appropriate.
• For biosimilars: implement a "biosimilar-first" approach. This could include giving biosimilars preferred placement on the formulary, gradually removing the reference product, offering lower copays for biosimilars, or placing the brand on a higher cost tier.
• Engage your PBM to demonstrate net savings: what are the savings after rebates / spread / pricing adjustments, not just list-price differential?

• Clinician and patient awareness are critical for biosimilars. Some providers may hesitate to switch stable patients, and some patients may worry about the effectiveness of the switch. Clear education and communication can help overcome these concerns.
• Establish pathways such as prior authorization or step therapy that facilitate switching to biosimilars when clinically appropriate, balancing continuity of care with cost savings.

• Monitor upcoming patent expirations and biosimilar launches for key biologics such as Xolair (for asthma and allergy), Eylea (for ophthalmic conditions) and Simponi and Orencia (for autoimmune conditions).
• Identify when opportunities to shift to biosimilars arise and be prepared to adjust plan or benefit designs accordingly.
• Anticipate potential adoption barriers like provider hesitation, PBM formulary delays, interchangeability issues, or state regulations and factor them into your planning.

• Generics and biosimilars are part of a broader set of levers: specialty-drug management, GLP-1 trend mitigation, medical-benefit pharmacy migration, and rebate optimization.
• Avoid viewing generics and biosimilars in isolation. They deliver value only when considered within the full context of overall drug-spend dynamics and plan design.

Turning potential into real results

Generics and biosimilars aren't just cost-saving tools; they're essential levers for keeping prescription benefits sustainable. With specialty drug costs rising and rebate structures growing more complex, underutilizing these options puts plans at greater financial risk.

The upside, however, is significant. Thoughtful plan design, active monitoring of substitution rates, and clear communication and engagement with members and providers can turn potential savings into tangible results. Biosimilars deliver on their promise only when paired with a coordinated strategy, where metrics, incentives, and education are all aligned.

Benefits leaders don't have to wait for savings to happen; they can engineer them. Start by asking: Are substitution rates hitting benchmarks? Are plan levers aligned to encourage the use of generics and biosimilars? Are net savings being tracked effectively? When the answer is "yes," potential becomes performance, and ROI becomes real.