For many self-funded employers, pharmacy benefits can feel like a moving target. One year, costs look manageable. The next, a handful of high-cost specialty drugs can put real pressure on the plan. Biologics are often a big part of that story. They have improved treatment options and quality of life for people living with cancer, autoimmune conditions, diabetes, and other serious diseases, but they come with high price tags.
That is where biosimilars deserve closer attention. These therapies offer a lower-cost alternative to reference biologics without compromising the clinical value employers and members depend on. For benefits leaders, they create a meaningful opportunity: reduce pharmacy spend, improve affordability for members, and support broader access to important treatments.
The bigger question is whether formularies are keeping up. If a plan gives higher-cost brands the advantage when lower-cost biosimilars are available, savings will be left on the table. And with recent U.S. Food and Drug Administration (FDA) action making biosimilars easier and less costly to bring to market, the opportunity to rethink formulary strategy is only getting stronger.
Why biosimilar cost-saving potential is too large to ignore
Specialty medications represent a small share of prescriptions, but they account for an outsized share of drug spending. According to the FDA, biologics make up about 5% of prescriptions and 51% of drug spending. Many of these therapies cost hundreds of thousands of dollars each year, which makes formulary design a critical lever for cost control.
When a lower-cost biosimilar is available, continuing to prefer the reference product can lock in avoidable expense. For plan sponsors, biosimilars offer a practical way to improve value without reducing quality of care. As of April 2026, the FDA had approved 83 biosimilars across major treatment areas.
The financial impact can be significant. One analysis found that broader access to Humira biosimilars alone could have saved the healthcare system up to $6 billion in one year. Over the next decade, patients and plans could forego $234 billion in potential savings if higher-cost reference products continue to dominate.
FDA policy changes are helping biosimilars move faster
The FDA has taken several steps to streamline biosimilar development and reduce unnecessary costs. In March, the agency issued draft guidance recommending the removal of certain clinical testing requirements when scientific evidence already supports biosimilarity. That change could cut study costs by up to 50%, or about $20 million per development program.
The agency had already reduced some comparative efficacy study expectations, which can take one to three years and cost about $24 million. It also updated guidance on the use of non-U.S.-licensed comparator products, giving developers more flexibility in how they build evidence.
Together, these changes create a more efficient path to approval. For employers and other stakeholders, that matters because more market entrants can improve pricing, strengthen negotiating leverage, and expand formulary options.
Adoption barriers still limit the impact
Despite strong FDA support, biosimilars have not reached their full market potential. One major challenge is formulary structure. Brand biologics often retain preferred status because of rebate contracts and long-standing market relationships. As a result, biosimilars may face less favorable tier placement, higher member cost sharing, and/or additional access restrictions.
Patent thickets also allow brand manufacturers to build large groups of patents around a product, delaying competition well beyond the original exclusivity period. AbbVie, for example, protected Humira with more than 100 patents and reached settlements that delayed several biosimilar launches. More broadly, patent litigation can delay market entry by at least two years, and sometimes by more than 15 years.
Additional tactics, including pay-for-delay arrangements, aggressive contracting, and targeted brand marketing, also make competition harder. These practices can keep lower-cost biosimilars from competing on equal terms even when clinical outcomes are similar.
What stakeholders should do next
Biosimilars are an important tool for controlling drug costs and improving access to essential therapies. FDA reforms are making development more efficient, and the growing number of approvals shows the market is maturing. Still, savings will not happen on their own. Formularies must evolve, and stakeholders must address the legal, financial, and educational barriers that continue to slow adoption
Key actions include:
1. Build flexible benefit designs: Prefer clinically appropriate biosimilars when they deliver equal outcomes at a lower total cost.
2. Increase pricing and rebate transparency: Plan sponsors need a clear view of wholesale costs, rebates, fees, and net spend to make sound formulary decisions.
3. Educate prescribers and patients: Clear communication about safety, efficacy, and interchangeability can reduce hesitation and improve confidence.
4. Support policy reform: Policymakers should continue addressing patent thickets and anti-competitive contracting practices that delay competition.
A thoughtful biosimilar strategy can help employers improve affordability today while building a more sustainable pharmacy benefit for the future.
Learn more:
The Employer’s GLP-1 Dilemma: Balancing Quality Care and Cost Control, April 22, 2026
One Health System’s Journey to Address Unsustainable Pharmacy Costs, April 8, 2026
Carving Out Pharmacy Benefits: A Path to Savings and Control, March 17, 2026
