Pharmacy benefits are the fastest growing benefit in healthcare. They’re the most utilized employee benefit and represent approximately 30% of healthcare spend, with specialty drugs representing about 60% of drug spend.1

As costs continue to increase, employers are looking for ways to mitigate rising pharmacy costs while maintaining or improving their employee experience. One best practice today is increasing biosimilar utilization by preferring them on your formulary, or list of covered drugs.

Biosimilars are lower-cost options for FDA-approved brand name drugs that reduce the price per prescription , on average, by more than 40%. 2,3 This article will provide you with a deeper understanding of the current biosimilar market, what’s ahead, and the actions you can take now to reduce your pharmacy costs.

A Trendsetting Biosimilar for Humira

To understand the potential, and complications, around biosimilar adoption, consider Humira, the world’s best-selling drug. Approved for various inflammatory conditions, Humira’s average gross cost is $7,000 per month, generating over $200 billion in revenue for its manufacturer, AbbVie, over the past two decades.4,5,6 Despite its efficacy, the cost burdened both employers and employees.

In 2023, Amjevita, the first biosimilar f or Humira entered the scene with a handful of others quickly following suit.5 With multiple biosimilars for Humira now in the market, we see an average 80% cost savings per prescription for employers, even without rebates. As drug prices decrease, this is also beneficial for employees who will pay less out of pocket.

The potential for savings from biosimilars is huge. However, biosimilars are often delayed to the market by several years due to patent litigations from the original brand name manufacturers, even when biosimilars are already FDA approved. For example, Amjevita was FDA approved in 2016 but could not launch until seven years later due to patent litigations around exclusivity.

Market challenges

Despite more biosimilars in the market, their adoption rate is lower than expected primarily due to:

  • Pharmacy benefit manager (PBM) formulary practices: PBMs – third-party administrators of prescription drug programs for health plans and employers – often favor original, brand name drugs with higher rebates and fees, that often benefits them more than patients.
  • Interchangeability issues: Many biosimilars lack interchangeability status, meaning the ability for the dispensing pharmacy to automatically substitute the biosimilar for the original, brand name product without additional approval from the prescribing provider.
  • Brand manufacturer tactics: Companies push existing users to move to other high-cost original, brand name products, such as Skyrizi, which is also made by AbbVie but does not have any biosimilars.

The combination of these factors makes the average market share for biosimilars under 20%.3

A Turning Point: PBMs Are Starting to Embrace Biosimilars

In April 2024, CVS, one of the big three PBMs who control 80 of the prescription drug market –Optum, CVS, and Express Scripts (ESI) – led the charge to replace original, brand name products with biosimilars on its formulary.

While CVS received some positive press for this move, it’s also important to note that CVS recently launched Cordavis, an international subsidiary that co-produces biosimilars with manufacturers like Sandoz. As a result of this partnership, Sandoz now controls 13% of the anti-inflammatory market, while other Humira biosimilar manufacturers share less than 5%.7

Optum and ESI soon followed CVS by announcing relationships with third-party biosimilar procurers and private-label manufacturers, Nuvaila and Quallent Pharmaceuticals, respectively, to co-produce and co-label their own biosimilars to prefer on their formularies.8

These changes in the market create conflicts of interest, as they’re avenues of revenue with a lack of transparency and reporting requirements for PBMs.

What’s Ahead for Biosimilars

We can expect that the standard strategy for PBMs will be to prefer biosimilars on their formularies to promote the lower net cost options.

It’s important to keep in mind that each of the big three PBMs will prefer their co-produced and co-labeled biosimilars rather than the lowest net cost version in the market, such as Yumsiry, which is currently offered at $570 per month (plus shipping and fees) from Mark Cuban’s Cost-Plus Drug Company.6 Plan sponsors and their members will still experience cost savings, but it’s likely to be less than the lowest net cost product available.

The pipeline for biosimilars is robust from now until 2026, with approximately 45 biosimilar approvals and 37 biosimilar launches on the horizon.9 The next blockbuster drug to have a biosimilar hit the market will be Stelara in 2025. Stelara generated over $50 billion in revenue for Johnson & Johnson over the last decade, with the average gross cost reaching $13,000 for a month’s supply.10 Stelara is likely in most companies’ top 10 covered drugs and is used for inflammatory and dermatological conditions.11

We anticipate that the Stelara biosimilar cost savings and utilization trends will follow a similar pathway as Humira’s – at first, utilization and cost savings will be lower, but will grow as more biosimilars come to market, creating competition. In general, although biosimilars reduce costs to both employers and employees , the big three PBMs will continue to drive revenue by co-producing and giving preference to their own versions of the Stelara biosimilar, when available.

Actions Companies Can Take

Companies can adopt several strategies to manage biosimilars in their PBM contracts. Here are the best management practices we see most of our clients implementing for biosimilars to optimize cost savings:

  • If your company is self-funding its health plan, ask your carrier or PBM about its current biosimilar strategy and recommend that they favor biosimilars over brand name drugs.
  • Work with your plan advisor to negotiate with your carrier or PBM to pass-through any rebates received on biosimilars.
  • Ask your carrier or PBM about their educational programs for prescribers and patients about the safety and efficacy of biosimilars compared to the original, brand name products. These types of educational programs help to enhance provider and patient knowledge about biosimilars to build trust in their choice of selecting the clinically safe and effective, lower cost option.
  • Work with your advisor to request and review claims data for opportunities to maximize biosimilar utilization and cost savings

Need guidance on your pharmacy benefits? Connect with a Sequoia advisor to learn how Sequoia’s pharmacy advisory team is integrated in our benefits services and tailored solutions.

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current pharmacy developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog. © 2024 Sequoia Consulting Group. All Rights Reserved.

Additional Resources

  1. Business Group on Health. 2025 Employer Health Care Strategy Survey. August 2024. https://www.businessgrouphealth.org/resources/2025-Employer-Health-Care-Strategy-Survey-Intro
  2. Center for Drug Evaluation and Research. (2024). Basics for patients. U.S. Food and Drug Administration. https://www.fda.gov/drugs/biosimilars/biosimilars-basics-patients
  3. 2024 savings report. Association for Accessible Medicines. (2024). https://accessiblemeds.org/resources/blog/2024-savings-report
  4. DailyMed – HUMIRA- adalimumab kit HUMIRA- adalimumab injection, solution. (2002). https://www.dailymed.nlm.nih.gov/dailymed/drugInfo.cfm?setid=608d4f0d-b19f-46d3-749a-7159aa5f933d
  5. Walker, L., & Gorenstein, D. (2023, January 31). AbbVie’s blockbuster drug Humira finally loses its 20-year, $200 billion monopoly. NPR. https://www.npr.org/sections/health-shots/2023/01/31/1152513058/abbvies-blockbuster-drug-humira-finally-loses-its-20-year-200-billion-monopoly#:~:text=A%20fierce%20fight%20for%20market%20share&text=According%20to%20original%20calculations%20done,this%20drug%2C%20is%20less%20clear
  6. Lupkin, S. (2023, July 20). Blockbuster drug Humira finally faces lower-cost rivals. NPR. https://www.npr.org/sections/health-shots/2023/07/20/1188745297/humira-threatened-by-yusimry-low-cost-rival#:~:text=Humira%20is%20an%20injectable%20drug,patients%20find%20discounts%20on%20pharmaceuticals
  7. Manalac, T. (2024, July 12). AbbVie’s Humira continues to lose market share as biosimilars gain ground: Report. BioSpace. https://www.biospace.com/business/abbvies-humira-continues-to-lose-market-share-as-biosimilars-gain-ground-report
  8. Fein, A. J. (2024, August 16). When payers become producers: Inside the PBM private-labeling trend. Drug Channels. https://www.drugchannels.net/2024/08/when-payers-become-producers-inside-pbm.html
  9. CVS Health. (2023). Pipeline surveillance. Business Caremark home page. https://business.caremark.com/Company-solutions/cost-management/pipeline-surveillance.html
  10. Wingrove, P. (2023). Stelara patent deal puts J&J back on path to $57 billion 2025 Revenue Forecast | reuters. Reuters. https://www.reuters.com/business/healthcare-pharmaceuticals/stelara-patent-deal-puts-jj-back-path-57-bln-2025-revenue-forecast-2023-06-05/
  11. DailyMed – STELARA- ustekinumab injection, solution STELARA- ustekinumab solution. (2009). https://www.dailymed.nlm.nih.gov/dailymed/drugInfo.cfm?setid=c77a9664-e3bb-4023-b400-127aa53bca2b
Nelsie Nelson — Nelsie Nelson is a licensed pharmacist with over 10 years of experience as a national pharmacy practice leader in pharmacy benefit management. She currently serves as Sequoia’s national Director of Pharmacy. Her areas of expertise are broad including: innovative pharmacy strategic leadership, industry leading clinical insights & recommendations and procurement & vendor implementation & management. She’s passionate and accomplished about balancing plan sponsor cost reduction with exceptional member benefit experience.