Exclusive Interview with the Researcher: James Robinson on Hospital Adoption and Pricing of Cancer Biosimilars

Exclusive Interview

Biologic cancer drugs are among the most expensive treatments and make up a growing share of oncology spending. As patents for these drugs expire, lower-cost biosimilar options create opportunities for increased drug competition and reduced drug spending. A NIHCM-funded study, conducted by James Robinson, PhD, Ari Kosorukov, and Christopher Whaley, PhD, found that biosimilar adoption increased over time. While hospital acquisition prices of oncology biosimilars declined, reimbursement prices did not drop as rapidly, leading to increased hospital margins, up to fivefold in some cases.

Learn more about this recent JAMA publication and the implications of its findings in this exclusive interview with James Robinson.

Q: What surprised you most about your findings regarding pricing and biosimilar adoption? 
A: The rapid adoption of biosimilars for physician-administered cancer biologics contrasts with the slow adoption of patient-administered biosimilars and is an optimistic note for health care cost moderation. At first glance, this finding is unexpected because these infused products pass through the 'buy and bill' distribution system, where hospitals purchase the product at one price from the distributors and then are reimbursed by the insurers (in our case, the Blue Cross and Blue Shield health plans) at a higher price, retaining the price markup as margin. This 'buy and bill' method of distribution would seem to favor use of expensive biologics over less expensive biosimilars, but the opposite result occurred. Our study found that hospital price markups grew markedly over the five years of the study (2020-24), especially for biosimilars, giving hospitals the financial incentive to switch from the biologics to the biosimilars. And, guess what, they followed their incentives and switched.

Q: What are the key takeaways for policymakers and health care leaders interested in drug access and increasing affordability?
A: There is a considerable potential for price competition in the pharmaceutical sector, with generics, biosimilars, and therapeutically equivalent brands seeking to gain share from the established products. But potential price competition only translates in actual price competition, and thence to savings, if the purchasers have the capabilities and the incentives to adopt the least costly alternatives. In the complex world of infused biologics and biosimilars, both the hospitals and the insurers function as purchasers. They have considerable leverage, if they learn how to use it.