Health Plans

Considerations for PBMs bracing for the biosimilar boom

By Brooke Kulusich, Daniel Galajda, and Colin Russi

Dec. 7, 2022 | Article | 8-minute read

Considerations for PBMs bracing for the biosimilar boom

Signed into U.S. law in August 2022, the Inflation Reduction Act intends to address rising prices and living costs. Despite numerous changes to prescription drug pricing in the Medicare Part D program, beneficiaries still feel the pinch. Furthermore, outpatient prescription drug prices show no signs of leveling off. The Congressional Budget Office projects spending on Medicare Part D benefits will eclipse $119 billion in 2022, a 21% increase in the last year. When beneficiaries can’t afford their medications, adherence rates decline drastically. One study found drug costs preclude three in 10 adults from taking their medications as prescribed.


Rising drug costs have several implications for Medicare Advantage plans:

  • Member satisfaction. Prescription drug costs influence Medicare Advantage plan member satisfaction. Among reasons expressed by dissatisfied members, 29% cite lack of coverage for their preferred providers, 25% cite high out-of-pocket costs and 22% cite insufficient prescription drug coverage. In addition to members’ financial wellbeing, plans also should consider how physical and mental health contribute to member satisfaction. The inability to afford medications often worsens clinical outcomes and causes undue stress.

Key questions for PBMs: What other factors contribute to member satisfaction? How are PBMs addressing these?

  • Clinical outcomes. Cost-related nonadherence results in poor clinical outcomes. Nonadherent members experience considerably more hospitalizations, emergency room visits and deaths than do people who take their medications as prescribed. Nonadherence annually costs the U.S. healthcare system more than $105 billion, roughly half of all avoidable healthcare costs.

Key questions for PBMs: How are PBMs supporting medication adherence in their members? How are they engaging providers in this effort?

  • Performance metrics. Quality and cost measures improve in tandem with better medication adherence, greater member satisfaction and improved clinical outcomes. In calculating Medicare Star Ratings performance, the Centers for Medicare & Medicaid Services triple weights medication adherence, which comprises 31% of the overall Medicare Part D rating. Unsatisfactory performance metrics place plans at a disadvantage in competitive markets and prevent them from receiving financial incentives.

Key questions for PBMs: How can PBMs make an impact, especially in populations at higher risk for nonadherence?

Despite these challenges, pharmacy benefit managers (PBM) are uniquely positioned to drive reductions in Medicare Part D drug costs as a new opportunity emerges: biosimilars. These biologics are highly similar to medications already approved by the Food and Drug Administration and provide lower-cost alternatives for eligible patients. In fact, total biosimilar savings are projected to reach $38.4 billion between 2021 and 2025. Adoption of biosimilars will accelerate into 2023, when several additional biosimilars for Humira, the best-selling drug in the world, are expected to launch in the U.S. With their influence on drug prices and formulary selections, PBMs should be prepared to make these lower-cost alternatives accessible to patients that need them.


Biosimilars, with their vast potential to expand treatment options and lower drug costs, will be a market-altering event for PBMs. Here are four key considerations for PBMs as they develop a biosimilar strategy:


  • Optimize plan design. To encourage biosimilar use, PBMs can harness numerous tools to optimize prescription drug benefit design, including formulary inclusion, tier placement and utilization management (UM). As the formulary gatekeepers, PBMs will need to carefully weigh efficacy and costs when evaluating new-to-market biosimilars. While extensive rebate programs might typically drive formulary decision making, biosimilars’ lower costs will require PBMs to explore clinical outcomes and costs in tandem.

Additionally, tier placement of biosimilars can significantly sway prescribers’ preferences. Unless the formulary designates the biosimilar as “preferred,” the prescriber will likely select the more familiar reference product.


Lastly, creating separate UM requirements for biosimilars and their reference products could promote member adoption. Examples include not requiring prior authorization (PA) for a biosimilar (and requiring PA for the reference product) or utilizing step therapy to require members try a biosimilar before considering its reference product.


Key questions for PBMs:

  • How will the rise of biosimilars influence formulary selection? What factors will influence these decisions?
  • How is your current tier placement of biosimilars perceived by prescribers?
  • Are your UM systems set up to encourage biosimilar use? If not, what changes need to be made?


  • Influence providers. By giving their stamp of approval, healthcare providers can influence member use of biosimilars. While providers can expect to be sales targets for biosimilar manufacturers, opportunities exist for PBMs to generate incremental lift in provider adoption. PBMs can complement manufacturer sales efforts by providing supplemental information that offers a different perspective and builds provider familiarity with biosimilars.

Many physicians, like their patients, lack a robust understanding of these products and can feel uncomfortable prescribing them. Prescribers need more clinical data reinforcing the safety profiles and regulatory requirements of biosimilars to feel confident employing them in practice. Furthermore, real-world evidence can reveal a deeper layer of biosimilar outcomes beyond clinical trials and address lingering concerns. In addition to clinical evidence, prescribers also could utilize cost savings data on biosimilars when suggesting financial benefits to patients.


PBMs may consider tapping another advocate for biosimilars: pharmacists. As the most accessible healthcare providers, pharmacists can leverage their point-of-sale encounters with members to start a dialogue about switching to an interchangeable product or suggesting biosimilar alternatives to their physician. Educating and counseling patients on the availability of cheaper alternatives is a core tenet of Medication Therapy Management (MTM). If financially incentivized through an MTM platform, 62% of pharmacists said they would be more likely to integrate biosimilars into their clinical practice.


Key questions for PBMs:

  • Have you developed a strategy for engaging providers? How will your approach differ for various provider types?
  • How do you plan to build prescriber confidence in biosimilars? How will your strategy for targeting providers differ from that of biosimilar manufacturers?
  • How will you leverage pharmacists as advocates for biosimilars? What are the right incentives?


  • Influence members. PBMs can encourage eligible members to explore biosimilar alternatives through education and targeted messaging. Initiating behavior change in members on stable regimens with reference products will undoubtedly present its challenges, regardless of the potential cost savings. To overcome this hesitancy, member awareness and understanding will be key factors that influence their willingness to convert to biosimilars. With direct lines of communication to members, PBMs are ideally positioned to fill this knowledge gap by providing them with educational materials and support.

Additionally, PBMs can develop strategies for identifying members who are most likely to convert, encouraging conversations with their healthcare providers, addressing member concerns and articulating the benefits of biosimilars. Empowering members to feel self-directed in their care and maintaining the integrity of the patient/provider relationship will be crucial to earn their buy-in. Lower drug costs will in turn drive medication adherence and boost overall member experience.


Key questions for PBMs:

  • Do you know which members are most—or least—likely to convert to biosimilars?
  • Have you crafted messaging for all your member segments? How will you deliver these messages?
  • What is your outreach strategy? How will your message differ for patient populations across various geographies?
  • Demonstrate value. Considering PBMs’ significant stake in biosimilars, they should be prepared to quantify their value to stakeholders. Biosimilars promise lower costs and improved clinical outcomes. To prepare for biosimilar launches, PBMs should ensure they have the data analytics capabilities in place to measure cost savings, improvements in clinical outcomes and overall return on their investment.

PBMs should have a mechanism to measure and compare the impact of different marketing tactics. For example, they should be able to compare whether commercials or mailed brochures are driving more biosimilar conversions. This would extend greater flexibility to PBMs, allowing them to course correct as necessary and effectively optimize their allocation of resources.


Additionally, PBMs should consider capturing anecdotal evidence from members and providers about their positive experiences with biosimilars. Success stories offer powerful personal perspectives that can generate additional stakeholder support.


Key questions to consider:

  • What capabilities do you have in place to measure the value of biosimilars? What capabilities do you lack?
  • What information do stakeholders need to understand the value of biosimilars? How will that information differ for each stakeholder segment?
  • How will you engage members and providers to capture success stories? What are the best ways to share these to maximize awareness?

Amgen Inc.’s anticipated biosimilar launch in January 2023 will mark the official end of AbbVie’s exclusivity over blockbuster Humira. The wave of biosimilars entering the market in the months to follow will undoubtedly disrupt the biologics market and transform PBM economics. PBMs need to think intentionally about their approach to biosimilars and should consider engaging an external partner to accomplish their goals. ZS has helped numerous clients activate members and providers to optimize therapy selections by leveraging strategy and analytics.


With thoughtful preparation, PBMs can play a meaningful role in increasing access to these therapies and lowering the cost of care.

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