If there is one thing that all stakeholders in the prescription drug supply chain can agree on it’s that patients’ out-of-pocket costs for many branded medicines can be prohibitively high. This is particularly true for biologics. When their patents expire, the launch of cheaper biosimilars can lower costs considerably. But the United States market for biosimilars is riddled with barriers that don’t allow it to function optimally. Both drug manufacturers and payers are to blame. Patients suffer as a result, with less access and higher cost-sharing than is warranted.
Biologics are drugs made from living organisms which can activate the immune system to treat, among other things, diabetes, multiple cancers and numerous autoimmune disorders. Biosimilars are biologic products that are highly similar to an already approved reference biologic, with no clinically meaningful differences in safety, purity and potency. Starting in 2015 in the U.S., they first became available in the filgrastim class of drugs, used to help prevent infection in people who have low levels of white blood cells. Since then, they have launched primarily in autoimmune and cancer therapeutic classes, referencing 13 unique reference products.
Biosimilar competition can substantially reduce the cost of expensive biologic medicines. However, biosimilars continue to face challenges unique to the American healthcare system, including persistent and lengthy patent litigation battles and dynamics in the payer or pharmacy benefit manager space which can impede biosimilar entry and often don’t favor uptake of the lowest-priced biosimilars. While biosimilar uptake has gained traction in the past five years after a sluggish start, it’s far from optimal. And the future for biosimilars doesn’t look encouraging. According to IQVIA, 90% of the 118 biologics losing exclusivity in the next decade have no biosimilar candidates in development. There are multiple reasons for this “biosimilar void,” including the relatively high cost of biosimilar development. But a poorly functioning market is likely also at fault, which dims the prospects of sales for biosimilar manufacturers contemplating whether to develop products.
Different kinds of anti-competitive business practices violate the principle that free and fair competition from generic or biosimilar alternatives at (often much) lower prices should follow a defined period of patent exclusivity. In this context, we see in the U.S. that manufacturers of biosimilars are often blocked from entry and the lowest-cost products are usually not preferred by payers.
Patent Litigation
The biosimilar market in the U.S, has been marred by the problem of patent thickets. Described by the economist Carl Shapiro as a “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology,” branded biopharmaceutical manufacturers use patent thickets to extend the market exclusivity of their products, often resulting in lengthy patent litigation. They’ve been deployed to prevent biosimilars from entering the market, which can limit patient access to cheaper products, a case in point being Humira (adalimumab), used to treat various autoimmune conditions.
In a legal ruling reported in 2022, a 7th Circuit Court Federal Judge affirmed dismissal of claims challenging AbbVie’s “patent thicket” around Humira (adalimumab). Controversially, the judge explicitly questioned whether there’s anything “wrong with [a product having] 132 patents.” By Easterbrook’s reasoning, building a patent fort to fend off competition in perpetuity is permissible so long as the patents are legitimate. But this forestalls competition.
Humira finally relinquished its monopoly right in the U.S. in 2023. Originally, the biologic was slated to lose its patent in 2018. However, a court tussle in 2017 led to a settlement in which biosimilars could not launch until January 2023. And so, despite getting approval from the Food and Drug Administration before 2023, six adalimumab biosimilars couldn’t launch due to a “compromise” deal struck between Humira’s sponsor and biosimilar manufacturers.
One year after their launch in the U.S., these biosimilars captured under 3% of total adalimumab prescriptions. And Humira still held a remarkable 77% of the market share for adalimumab products in early 2025.
By contrast, in Europe biosimilars that reference Humira have already been on the market for seven years. Within one year of market entrance, adalimumab biosimilars had more than 50% of market share in Germany. And in many European markets by the early 2020s, biosimilars had more than 85% of market share. In Denmark, adalimumab biosimilars captured 95% of market share almost immediately after the patent expiration of Humira in October 2018.
Private-Label Biosimilars
The problem of potentially anti-competitive practices isn’t confined to drug companies’ behavior. Pharmacy benefit managers have at times favored more expensive products over similar or even bioequivalent versions that are cheaper. Warped financial incentives sometimes pervade the pharmaceutical supply chain.
Competitive markets are supposed to boost the availability of lower and lowest price options for consumers. But PBMs may exclude certain lower-cost biosimilar drugs from coverage, instead opting for private-label options that are not the lowest cost. Here, PBMs partner with manufacturers to commercialize their own private-label biosimilars. This happened in April 2024 when the PBM CVS Caremark launched private-label versions of a Humira-referenced biosimilar, while excluding several other biosimilars and branded Humira. In turn, this led to an increase in the number of prescriptions for private-label biosimilars. Two similarly large PBMs followed suit with their own private-label products.
A similar scenario is now playing out with respect to Johnson & Johnson’s branded Stelara (ustekinumab) and referenced biosimilars. Like Humira, Stelara is prescribed for several autoimmune conditions. Following legal settlements that allowed for their entry, four biosimilars have launched in 2025. Others have been FDA-approved but aren’t yet on the market. The products have list price discounts that are 5% to 95% lower than Stelara’s list or wholesale acquisition cost price.
Among the launched biosimilars are private-label versions. For example, OptumRx—a subsidiary of UnitedHealth Group—launched a private label Stelara biosimilar called Wezlana through its Nuvaila business. It did this offering both a high- and low-list priced version, one that is 81% off of Stelara’s WAC and one that is just 5% lower. The low-list price version is still higher than what the independent PBM MedImpact is offering on its formulary for next year, an unbranded biosimilar available to any licensed specialty pharmacy in the U.S. at a 95% discount from Stelara.
The two-price approach that OptumRx has adopted highlights the confusing way in which drugs are priced in the U.S. and how patients can be negatively impacted. We’ve witnessed this strategy before with Humira-referenced biosimilars. The first such product, Amjevita, was launched in 2023 at two different list prices, a discount of 5% and 55%, respectively, compared to the price of Humira. Meanwhile, the biosimilar Yusimry has an 85% discount, yet is excluded from OptumRx’s formulary.
Regarding Amjevita, employers and health plans who contract with OptumRx have a choice to make: Do they prioritize low net cost or a high WAC coupled with high rebates. Rebates are payments made by drug manufacturers to PBMs in exchange for moving market share towards a “preferred” product. PBMs share rebates with those with whom they contract. The majority of employers and health plans tend to go high WAC/rebate versions, but then patients with co-insurance–calculated as a percentage of WAC–pay more out-of-pocket.
Whether favoring high list price biosimilars or private-label versions, PBMs introduce perverse incentives into the system. In the case of the private-label strategy, they now have a direct revenue stake in biosimilar sales through affiliated companies that manufacture and distribute their products. And this presents potential conflicts of interest if PBMs steer prescribing toward their own products without full transparency to those with whom they contract–employers and health plans–regarding why certain products were chosen or preferred and not others. Biosimilar manufacturers who don’t reach agreements with these PBMs may be excluded altogether from coverage or only have (severely) restricted access.
Broadly speaking, competitive markets have numerous sellers and buyers, all of whom have relevant information to make rational decisions about the products being bought and sold. There’s market (information) transparency, and firms can freely enter or exit the market. Very few markets are perfectly competitive. But in a properly functioning economy, most markets for most goods exhibit a high degree of competitiveness. This isn’t invariably the case with prescription pharmaceuticals and particularly with respect to biosimilars. Drug makers and payers are both to blame for entrance barriers, information asymmetry and often non-transparent pricing.
