Executive Summary: Biosimilars: The Cost Relief Opportunity Most Level Funded Plans Are Missing
LFP-09.06 — The Cost Drivers#
Biosimilars generated $20.2 billion in savings across the U.S. healthcare system in 2024, with cumulative savings since the first U.S. market entrant reaching $56.2 billion according to the Association for Accessible Medicines. The adalimumab market alone produced over $200 million in savings from January 2024 through March 2025, averaging $4,505 per patient per year according to Evernorth. As of June 2025, 71 biosimilars had received FDA approval across 19 reference products, with 53 commercially launched. The savings are real, documented, and compounding. Most small group level funded plans have not captured them.
The gap reflects three structural barriers operating simultaneously. PBM formulary economics present the first and largest. The three major PBMs have moved toward proprietary, private-label biosimilar distribution: Express Scripts through Quallent Pharmaceuticals, CVS Caremark through Cordavis, and Optum Rx through Nuvaila. By 2025, Humira had been removed from the standard commercial formularies of all three. These shifts create savings at the PBM level, but whether those savings reach the small group plan depends entirely on contract structure. Pass-through arrangements deliver the savings; spread-pricing arrangements may retain them. A small group plan without explicit biosimilar optimization in its PBM contract captures whatever the PBM chooses to pass through.
Provider prescribing patterns sustain the second barrier. Rheumatologists, oncologists, and gastroenterologists who have prescribed reference biologics for years continue doing so absent formulary pressure. Shifting prescribing requires prior authorization mandating biosimilar trial first, step therapy protocols before reference product access, or cost-sharing differentials that make biosimilar preference visible to the patient. Each mechanism requires TPA administrative infrastructure that many small group administrators lack. Plan design inertia completes the barrier set: renewal conversations focus on deductibles and premiums, not formulary positioning, and brokers rarely raise biosimilar optimization as a savings opportunity.
The savings opportunity for any plan with biologic utilization is quantifiable and meaningful. A plan with one member on reference adalimumab at approximately $77,000 annually at peak pricing captures $54,000 per year at a 70 percent discount on the biosimilar. For a 25-person plan with $300,000 in expected claims, that represents an 18 percent reduction in pharmacy claims exposure from a single drug switch. The stop loss interaction amplifies the value further: a member on reference adalimumab approaching the specific attachment point becomes a routine pharmacy claimant on a biosimilar, eliminating not only $54,000 in direct claims cost but also the renewal laser risk that high-cost claimant status generates.
Capturing this opportunity at the individual employer level is not realistic. The employer lacks PBM negotiating power, formulary expertise, and provider relationships. Systematic biosimilar adoption must occur at the TPA level, applied across the entire book of business through PBM contract selection, formulary positioning, prior authorization protocols, and provider outreach. The TPA’s PBM contract structure is the single decision that determines whether documented biosimilar savings accrue to small group plan sponsors or are retained elsewhere in the distribution chain.