Payer-Driven Biosimilar Preferences Create Financial and Operational Strain for Health Systems
The expansion of US Food and Drug Administration (FDA)-approved biosimilars has been heralded as a major advancement for lowering healthcare costs in the US, with the potential to reduce both system-wide expenditures and patient out-of-pocket costs. However, payer-driven decisions regarding formulary preferences present new challenges for health systems. When insurers mandate coverage of a product that differs from the hospital’s own formulary choice, providers are forced to navigate operational and financial hurdles that complicate care delivery. This dynamic raises questions about whether the theoretical cost savings from biosimilars are being realized consistently across stakeholders.
A recent study investigated the impact of payer-driven biosimilar preferences specifically in the use of trastuzumab and bevacizumab, both widely prescribed chemotherapeutic agents. The study examined insurance denials and subsequent resubmissions when health-system-preferred biosimilars were rejected in favor of insurer-mandated alternatives. Although only 18 of 452 patients (4%) experienced such denials, the consequences proved notable. Switching to payer-preferred agents resulted in a measurable 1.28% increase in actual hospital acquisition costs. While that percentage may seem modest, the absolute impact becomes meaningful when applied to large patient populations and expensive oncology therapies.
Beyond financial costs, the study highlighted the hidden administrative burden these formulary conflicts generate. Denials and resubmissions created significant inefficiencies, requiring an additional 70 hours of IT resources, 10.5 hours of pharmacist involvement, and 18 hours of patient access coordinator time. These cumulative operational costs reflect a diversion of healthcare resources that could otherwise be directed toward patient care. Importantly, the delays associated with prior authorization resubmissions may also affect timely initiation of therapy, though this study did not specifically measure clinical outcomes.
The findings underscore the tension between payer policies and health-system operations in the era of biosimilars. While the overarching goal of reducing drug spending remains valid, discordance between insurer formularies and hospital preferences imposes new costs and complexities. The study suggests that aligning payer and health-system strategies could better achieve the intended economic benefits of biosimilar adoption. Future research should also examine how these restrictions impact patients directly, particularly in terms of treatment delays, satisfaction, and out-of-pocket costs. Ultimately, while biosimilars hold promise for cost containment, payer mandates without coordination risk shifting burdens onto providers and undermining efficiency in care delivery.
Reference
Rana I, Fu Z, Brown EN, De La Torre RM, El Rahi C. Impact of discordant preferred drug status between hospitals and payers for chemotherapeutic biosimilars. J Oncol Pharm Pract. 2025;31(7):1159-1164. doi:10.1177/10781552251355509
