Understanding the Differences: Biosimilar Versus Generic Medications
The pharmaceutical industry is consistently evolving to meet the needs of patients, PBMs and health care providers, while also upholding the market’s demands. The trending development that promises more affordable pricing is biosimilar products. How do these medications differ from their original counterparts?
While biosimilar medications claim to be similar to generics in terms of pricing, there are key differences to understand. Biosimilar versus generic medications are created using their reference biological products, but they are composed of entirely different active ingredients to achieve the same function.
What is the Original?
Different variations of medications continue to be manufactured, often leading to consumer confusion. The archetype for a certain medication can come in two forms, depending on the prescription.
Biologics are composed of living sources, such as microorganisms and animal cells; this means that their genetic makeup requires larger, more complex molecules. Brand name nonbiologic medications are synthetically produced, requiring a chemical composition using smaller molecules.
While some biologic products do have their own “brand names,” they are thought of as a separate category from synthetic brand name medications.
Biosimilar versus Generic Medications
Thinking of it in these terms, generics are to brand names as biosimilars are to biologics—they are the less expensive version that can forgo the extensive clinical research process as long as they are biologically equivalent to the reference product (the original medication). The manufacturing process for biosimilar vs. generic prescriptions differs quite a bit.
For biosimilars, it is impossible to be completely bioequivalent when working with living sources. Instead, manufacturers must prove that the biosimilar offers no clinically meaningful differences concerning the safety, purity and potency of the product. Essentially, it must be extremely comparable, except for the variations in inactive ingredients.
On the other hand, generic medications require the chemically synthesized drug to be the same in every manufacturing group, resulting in no difference regarding the active ingredient’s effectiveness.
How Pricing Comes into Play
Due to the complexity of biological products and their biosimilar counterparts, as well as the convoluted web that is pharmaceutical pricing, large molecule medicines are more expensive than synthetically-made prescriptions.
The FDA estimates that generic medications are typically 20-70% less expensive than their brand name reference products. Biosimilars typically see a 15-35% reduction in consumer costs, depending on the medication at hand.
That being said, the real savings are delivered to the pharmacy benefit managers (PBMs) that have the power to choose the rebates they reflect toward customers.
For example, the biosimilar version of Humira—Amjevita—is being offered at two different discounts: 5% and 55%. While 55% sounds great, that large discount would affect the rebates incurred by PBMs.
One of the ways PBMs profit is through rebates. A rebate is a discount on the medication that a drug manufacturer gives a PBM in return for agreeing to offer their pharmaceutical drug or product on a formulary list for an employer’s pharmacy benefit plan. Traditional PBMs commonly push the narrative that employers receive “100% of rebates” when only a portion of rebates are shared with the self-insured employer. PBMs typically pocket the rest.
This suggests that the 5% discount for Amjevita is likely to be more popular due to PBM profitability.
The incentives ingrained into the U.S. pharmaceutical industry are for the benefit of corporations, not patients. Unfortunately, patients with coinsurance and deductibles will end up paying more out-of-pocket for biosimilars due to the corporate greed of PBMs that have the decision-making power to get bigger rebates for themselves.
The AffirmedRx Way
The AffirmedRx team always puts our members first. While other traditional PBMs prioritize profits by choosing expensive medications, regardless of if there is a less expensive biosimilar or generic alternative, because we prioritize patients over profits, we will continually offer the best clinical treatment for the most affordable price. Our public benefit corporation (PBC) designation allows us to forgo the profit mentality in order to better serve the members who trust our services.
To learn more about how we can save our members money while also competing for the best possible care, contact our team today.
