Biosimilars: The Cost Relief Opportunity Most Level Funded Plans Are Missing

Biosimilars generated $20.2 billion in savings across the U.S. healthcare system in 2024 alone, according to the Association for Accessible Medicines. Cumulative savings since the first biosimilar entered the U.S. market have reached $56.2 billion. The adalimumab (Humira) biosimilar market, where 14 competing products are now available, produced over $200 million in savings from January 2024 through March 2025, averaging $4,505 per patient per year according to Evernorth. The savings are real, documented, and growing.

Most small group level funded plans have not captured them.

The gap between available biosimilar savings and actual adoption in the small group market reflects three structural barriers: PBM formulary economics that do not prioritize small group cost reduction, provider prescribing patterns that default to reference products, and plan sponsor inattention to pharmacy benefit strategy. Biosimilar adoption is the most accessible cost relief opportunity in the small group market. It is also the most underutilized.

The Biosimilar Market in 2025

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As of September 2025, the FDA had approved over 50 biosimilars across 15 reference biologics. Fifty-three biosimilars had launched commercially across 14 reference product categories. By June 2025, 71 biosimilars had received FDA approval across 19 reference products. The market is no longer nascent. It is substantial and accelerating.

The contrast with European adoption remains stark. In European markets, biosimilar adoption for established products routinely reaches 70 to 90 percent market share within a few years of launch. Norway achieved above 90 percent biosimilar market share for infliximab. Germany reached 70 percent biosimilar adalimumab market share within two years. The U.S. has lagged, though the gap is narrowing. IQVIA data shows that U.S. adalimumab biosimilar adoption was modest in the first year after launch but surged after month 14 as PBM formulary strategies shifted, doubling by month 20. The acceleration reflects the power of formulary decisions: coverage and contracting drive adoption far more than clinical differentiation, because there is no clinically meaningful difference between a biosimilar and its reference product.

The adalimumab market illustrates the trajectory at its most competitive. AbbVie’s Humira earned approximately $200 billion in cumulative U.S. revenue since its 2002 launch, peaking at $21 billion annually. Amjevita (Amgen) became the first FDA-approved Humira biosimilar in 2016 but could not launch until January 2023 due to patent litigation settlements. By 2025, nine FDA-approved adalimumab biosimilars were on the market, with seven holding interchangeable designations that allow pharmacist substitution without prescriber consultation. The competitive pressure has produced real savings. CVS Caremark removed Humira from its major commercial formularies in 2024 in favor of a private-label biosimilar sourced through Cordavis. By 2025, Humira had vanished from the standard commercial formularies of all three major PBMs: Express Scripts, CVS Caremark, and Optum Rx.

The PBM market for biosimilars has shifted toward private-label and white-label products. Express Scripts’ formulary covers biosimilars marketed through its affiliate Quallent Pharmaceuticals. CVS Caremark covers Cordavis-branded products. Optum Rx covers products through its Nuvaila subsidiary. The consolidation of biosimilar formulary placement within PBM-affiliated distribution channels has implications for small group plans, addressed below.

Beyond adalimumab, the biosimilar pipeline continues to expand. Multiple ustekinumab (Stelara) biosimilars launched in early 2025, with four interchangeable designations granted by May 2025. Stelara generated over $10 billion in annual global revenue at its peak, making its loss of exclusivity the next major biosimilar savings opportunity after adalimumab. The FDA approved the first interchangeable omalizumab (Xolair) biosimilar in 2025. Biosimilars for infliximab (Remicade), rituximab (Rituxan), trastuzumab (Herceptin), bevacizumab (Avastin), and pegfilgrastim (Neulasta) have been available for several years with varying adoption rates.

Evernorth’s 2025 Pharmacy in Focus report documented the first sustained reversal in drug trend for inflammatory conditions in years, driven by biosimilar adoption. Drug trend in the inflammatory conditions category fell 1.9 percent in 2024 despite a 1.9 percent increase in utilization. The cost reduction came from lower unit costs as biosimilars displaced reference products, not from reduced prescribing.

Why Small Group Plans Lag

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Three structural barriers explain why small group level funded plans have captured less biosimilar savings than large employer counterparts.

PBM formulary economics are the primary barrier. The three major PBMs have moved toward proprietary, private-label biosimilar distribution. Express Scripts through Quallent, CVS Caremark through Cordavis, and Optum Rx through Nuvaila each favor their own affiliated products on standard formularies. This creates savings at the PBM level, but the pass-through to small group plans depends entirely on contract terms. A small group plan with a pass-through PBM arrangement captures the savings directly. A plan with a spread-pricing arrangement may see some of the savings retained by the PBM. A plan without any explicit biosimilar optimization in its PBM contract captures whatever the PBM chooses to pass through, which may be less than the full savings available.

The rebate dynamic compounds the problem. Reference biologic manufacturers historically offered large rebates to PBMs in exchange for preferred formulary placement. A PBM earning $25,000 to $30,000 annually in rebates per Humira patient had a financial incentive to maintain the reference product on formulary even when a biosimilar cost substantially less. The 2024 and 2025 formulary shifts away from Humira suggest that biosimilar pricing has finally undercut the rebate advantage, but the same rebate dynamic plays out in other biologic categories where biosimilar competition is less intense.

Provider prescribing patterns remain a barrier. Rheumatologists, oncologists, and gastroenterologists who have prescribed reference biologics for years may continue doing so absent formulary pressure. The prescribing shift requires either prior authorization mandating biosimilar first (administrative burden on the TPA), step therapy requiring biosimilar trial before reference product access (requires pharmacy benefit system capability), or cost-sharing differentials that steer patient preference toward biosimilars (requires benefit design sophistication). Each mechanism requires TPA infrastructure that many small group administrators lack.

Plan design inertia completes the barrier set. Small employers and their brokers focus renewal conversations on overall premium levels and plan structure: deductibles, coinsurance, out-of-pocket maximums. Biosimilar formulary positioning does not appear in the typical renewal discussion. The broker presenting a level funded proposal is unlikely to discuss biosimilar optimization. The employer is unlikely to ask. The savings remain uncaptured because no one in the decision chain prioritizes capturing them.

The Savings Quantified

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The per-member savings opportunity depends on whether a plan has members on reference biologics. A plan with no biologic utilization has no biosimilar savings to capture. A plan with members on reference products has a savings opportunity proportional to the number of members and the discount available.

For a plan with one member on reference adalimumab, the savings calculation is direct. The Humira reference product priced at approximately $77,000 annually at its peak. Adalimumab biosimilars are available at discounts of 50 to 85 percent from the reference list price. At a 70 percent discount, the biosimilar costs approximately $23,000. The difference, $54,000 per year, flows directly to the claims fund. For a 25-person plan with $300,000 in expected claims, $54,000 in savings on one drug represents an 18 percent reduction in pharmacy claims exposure.

The stop loss interaction amplifies the value of biosimilar savings for small groups. A member on reference adalimumab at $77,000 annually may approach or breach the specific stop loss attachment point, triggering stop loss claims and contributing to renewal increases. The same member on a biosimilar at $23,000 remains well below the attachment point. The biosimilar switch eliminates not only $54,000 in direct claims cost but also the downstream renewal pressure that high-cost claimant status generates. The plan avoids a laser at renewal. The aggregate corridor remains wider. The compounding benefit of biosimilar adoption extends beyond the direct drug savings into the stop loss economics of the plan.

Across biologic categories with available biosimilars, the aggregate opportunity compounds. A plan with members on adalimumab, infliximab, and rituximab captures savings on each product where biosimilars are available. Biosimilars since 2015 have delivered more than $30 billion in cumulative U.S. savings through 2025 according to Vizient’s analysis. The Evernorth Research Institute documented that drug trend in the inflammatory conditions category fell 1.9 percent in 2024, the first sustained reversal in years, despite continued utilization growth. For any individual small group plan with biologic utilization, the savings opportunity may represent 10 to 25 percent of total specialty drug spend.

What Systematic Adoption Requires

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Capturing biosimilar savings at the individual small employer level is not realistic. The employer lacks pharmacy benefit expertise, PBM negotiating leverage, and provider relationships. Systematic biosimilar adoption must occur at the TPA level, applied across the entire book of business.

TPA-level formulary strategy positions biosimilars as preferred products in all administered plans. The TPA either negotiates biosimilar-favoring formulary terms with its PBM, or selects PBM relationships where biosimilar optimization is the default. The TPA becomes the advocate for small group economics rather than relying on each employer to evaluate pharmacy formulary decisions independently.

PBM contract structure determines whether biosimilar savings reach the plan. Administrative-fee-only contracts or 100 percent pass-through arrangements align PBM incentives with plan cost reduction. Spread-pricing arrangements or opaque rebate-sharing terms may allow the PBM to retain savings. The TPA’s PBM contract selection is the single decision that determines whether biosimilar savings accrue to the small group plan or to the PBM.

Provider education and formulary compliance monitoring complete the operational infrastructure. A TPA with real-time claims visibility can identify when a prescriber writes for a reference product when a biosimilar is preferred. Prior authorization protocols, formulary restrictions, and member cost-sharing differentials create the pressure necessary to shift prescribing. None of these mechanisms activates automatically. Each requires the TPA to build and enforce the policy across its full book.

The generational dimension is relevant. Evernorth research found that younger patients, particularly Gen Z and millennials, express the highest awareness of and comfort with biosimilars. Yet pharmacy trend data shows their biosimilar utilization lags behind Gen X and baby boomers. The disconnect likely reflects provider prescribing patterns and formulary structures rather than patient preference. A TPA-driven biosimilar strategy that aligns formulary design, provider outreach, and patient communication can close this gap across age cohorts.

The biosimilar opportunity is the clearest example of a cost management strategy that only works at the TPA level. The drugs exist. The savings are documented. The individual small employer cannot capture them. The TPA that builds biosimilar infrastructure across its book of business changes the cost trajectory for every client in the portfolio.