Biologics: Combating Big Spend in Small Doses

Biologic therapies have transformed modern medicine, offering breakthrough treatments for cancer, autoimmune disorders, and other complex conditions. However, innovation comes at a steep price. Despite accounting for just a small fraction of total prescriptions, biologics now consume a disproportionate—and rapidly growing—share of US drug spending. Their high launch prices, recurring price hikes, and the slow adoption of lower-cost biosimilars make them one of the biggest drivers of rising health care costs for payers.

The challenge is twofold: payers and pharmacy benefit managers (PBMs) may be unintentionally incentivized to favor costly brand-name biologics, while many lack the evidence-based management strategies needed to curb overutilization or transition members into more cost-effective alternatives. The result: biologics—just 2% of available drugs—make up nearly 40% of drug spend.

Yet hidden within payers’ own data lies the opportunity to change this trajectory. By analyzing claims and utilization management (UM) patterns, payers can uncover where, when, and how biologic spend can be optimized—without compromising quality of care.

Biologic drugs (eg, monoclonal antibodies) are a primary driver of rising health care costs for payers due to their high prices, growing utilization, complex manufacturing, and the slow uptake of lower-cost biosimilar alternatives. Often used to treat cancer and autoimmune diseases such as psoriasis, rheumatoid arthritis, and Crohn disease, biologics represent a small fraction of all prescriptions and account for a disproportionately large share of medical expenditure (medex).¹

As innovative, complex drugs, biologics enter the market with very high initial prices to recoup significant research and development costs. Even existing biologic drugs often experience substantial price hikes over time, fueling spending growth for payers. A study found that biologics comprised 2% of drugs on the market yet account for 37% of US drug spend.²

Analyses also indicate that payers and PBMs may be incentivized to prefer high-cost brand-name biologics due to significant rebates, rather than steering toward less expensive biosimilars. Moreover, many payers and PBMs alike lack evidence-based management strategy to meaningfully manage the escalating cost of biologics and the increasing drugs coming onto the market.

The good news is that payers can find answers within their claims and UM data to change the trajectory of their biologic spend. By interrogating trends within these data, payers can uncover the “where, when, and how” to impact their medex. When combined, these data sets can help payers better manage health care costs, optimize resource allocation, and prevent fraud, waste, and abuse (FWA). In addition, UM and claims data can help identify cost-saving opportunities.

Recently, Sagility worked with a small plan in the Northeast to examine their Part B drug spend and to understand what opportunity may lie for reducing their medex. To do this, Sagility’s Consulting Team, consisting of clinicians, data scientists, and UM operations experts, applied specialty-specific measures to determine treatment efficacy to ensure optimal evidence-based outcomes.

Key to managing Part B drugs, the team applied a number of criteria to improve program effectiveness, including authorization of appropriate procedures or medication choice and intensity of review; normalized provider behavior and comparison for outliers; and reduction of procedure sequence. This deep dive into population profiling through claims analysis uncovered key issues:

• An initial spend analysis for plan’s Part B medications ($68 million total spend) showed that monoclonal antibodies (mAbs) were more than two-thirds of the total spend ($42 million), with pembrolizumab representing the highest Part B cost (12.5% of total Part B drug spending).
• The plan applied its own medical necessity criteria, combining Centers for Medicare & Medicaid Services (CMS) and Medicaid guidelines when determining drug coverage.
• The dosage and cycle of the top 12 mAbs showed that excessive dose units were given to patients in 10 out of 12 Top Spend drugs. Only 2 mAbs were administered within the guidelines.
• Treatment regimen deviated from the US Food and Drug Administration (FDA) guidance for efficacy and safety, and or national standards of care.
• Due to the treatment cost, mAbs are expensive even in small cohorts.

The cohort for this study was relatively small (under 800 members).

Controlling spend for this Northeast plan required understanding where “abuse” was taking place, which was addressed by applying the following levers:

• A population-specific analysis using claims and UM experience. This is critical as it helps to identify the UM strategy and levers to deploy.
• Evidence-based pathways that effectively manage treatment and health outcomes (see above criteria)
• When to leverage step therapy and conversion to biosimilar equivalents.
• How peer education is critical to sustaining the long-term impact of adherence to evidence-based treatment pathways.

The study uncovered $10 million in potential savings for the plan by reducing overutilization of mAbs. According to the claims analysis, by appropriately managing pembrolizumab alone, the plan would have saved $3.3 million. Further, conversion from brand names to biosimilar equivalents would yield an additional $1 million in cost savings.

Additionally, payers would be wise to leverage a more comprehensive management approach that can deliver significantly higher impact. In a comprehensive approach, payers should consider concomitant therapy alignment, vial optimization, and home infusion shift.

Biologic drugs continue to exert outsized pressure on health care budgets, even within small populations. As the analysis demonstrates, meaningful cost containment is not only possible—it’s achievable through smarter, data-driven strategies. By tightly integrating claims and UM data, payers can uncover the precise “where, when, and how” to intervene in biologic spending.

The key lies in transforming data into action. Evidence-based treatment pathways, targeted UM levers, and provider education are powerful tools—but their full potential is only realized when guided by deep, integrated analytics. From identifying overutilization to optimizing site-of-care and converting to biosimilars, each lever becomes more effective when informed by a comprehensive view of member outcomes and provider behavior.

Ultimately, the path forward for payers is clear: embrace evidence-based guidelines and an analytics-driven approach to biologic management. Doing so not only curbs unnecessary spending but also ensures better outcomes for members and greater sustainability for the healthcare system. The opportunity is significant—and the time to act is now.

Author Information 

Krithika Srivats, SVP of Clinical Practice and New Products & Solutions at Sagility, has been a thought leader in the health care industry deeply supporting innovation in care delivery. She has over 25 years of experience supporting patient care. She has been a speaker at several health care conferences and has published thought leadership articles in collaborative care, automation, and predictive analytics to improve home-based aging. Her deep experience in health care resonates in her podcasts and other published articles.

1. Hearing wrap up: oversight committee exposes how PBMs undermine patient health and increase drug costs. Committee on Oversight and Government Reform. Published July 23, 2024. Accessed November 21, 2025. https://oversight.house.gov/release/hearing-wrap-up-oversight-committee-exposes-how-pbms-undermine-patient-health-and-increase-drug-costs/?highlight=Report%20raise

2. What are pharmacy benefit managers (PBMs) and why we need reform?. AMA. Published August 7, 2025. Accessed November 21, 2025. https://www.ama-assn.org/health-care-advocacy/access-care/what-are-pharmacy-benefit-managers-pbms-and-why-we-need-reform

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