The U.S. stands at a crossroads in light of rising drug prices and it is unclear what the future will hold in answer to the rising drug costs. Biologic medicines have rapidly expanded available treatment options and accounted for approximately half of U.S. healthcare medicine spending in the past few years. While biosimilars have offered patients competing products at a fraction of the cost, the fledgling industry has been stymied by uncertainty.  Referred to as the “biosimilar void,” the future of the biosimilar market hangs in the balance, awaiting action to solve the unanswered questions circling the sustainability of biosimilar competition. In a February 2025 report, “Assessing the Biosimilar Void in the U.S.”1, the IQVIA Institute for Human Data Science outlines challenges faced by the biosimilars market as well as potential solutions to help promote healthy competition, reduce healthcare costs, and improve patient access.

Biosimilar Future Market Opportunities

Over the next decade (2025-2034), IQVIA reports that 118 biologics are subject to lose patent protection, thus presenting a $234 billion opportunity for biosimilar competition. Of these biologics, 22 are forecasted to exceed $2.5 billion in sales pre-expiry. The high-sales biologics facing expiry range from applications in immunology (11), oncology (6), neurology (2), hematology (1), diabetes (1), and cardiovascular diseases (1). Namely, the first PD-1 inhibitors (pembrolizumab, durvalumab, and nivolumab) are set to expire before 2034. However, with this loss of exclusivity, only 12 of these biologics have biosimilar versions in development. The author notes that this is not surprising when considering that only 14 out of 62 biologics that lost patent protection as of 2024 have biosimilar versions on the market. This gap in development leaves an opportunity to reduce costs and increase patient access to therapies, but that opportunity is hindered by difficult challenges.

Challenges to Biosimilar Development

The IQVIA report acknowledges that, to date, biosimilar development predominantly targets high-sales biologics, e.g., in oncology and immunology while leaving behind potential biosimilar competitors for lower lifetime sales medicines which make up almost $9 billion in branded sales. The remaining pre-expiry high-sales biologics without biosimilar development make up another $156 billion in potential earnings. The hesitation to tap into this untapped market largely stems from uncertainty in development costs (and subsequently the ability to recoup), regulatory hurdles, market unpredictability with shifting treatment paradigms, and market acceptance. Because biosimilar competitors mainly focus on biologics with greater than $1 billion in sales, the ability to recoup development costs with sales is likely the driving force behind the lack of biosimilar development. Even so, with such a vast number of high-sales biologics without biosimilar development, there are indications that sales potential is not the only factor stifling growth. 

Regulatory requirements create a tricky double bind beyond the typical burdens imparted by the approval process in cost and time. As of 2009, after the enactment of the Biologics Price Competition and Innovation Act (BPCIA), in order for biosimilars to demonstrate interchangeability it is required that there be “no clinically meaningful differences…in terms of safety, purity, and potency2” between the biologic and the biosimilar competitor, which tends to necessitate large and costly clinical trials. This creates additional hurdles during the regulatory process with the U.S. Food and Drug Administration (FDA). On the other hand, a lower interchangeability designation or non-interchangeability designation could feed into already present concerns and negative perceptions among patients and physicians about biosimilars as a whole. Market acceptance is already a barrier that biosimilar developers encounter even after the safety and efficacy has been proven, as biosimilar uptake post-market entry is modest at best3 . In a 2019 survey, 84% of physicians disapproved of nonmedical switching to biosimilars4 .

The report estimates that biosimilar development costs can reach upwards of $100 million. Thus, it is no surprise that developers are hesitant to commit resources in light of the uncertainties and challenges in this space. A clear example of this is complex biologics, e.g., antibody-drug conjugates, bispecific antibodies, and cell and gene therapies. Complex biologics introduce even steeper manufacturing and testing difficulties. As a result, there are currently no biosimilars in development targeting competition of the 16 complex biologics that will lose patent protection in the next decade. Further, competition for these complex biologics can come in other forms such as, for example, antibody-drug conjugates with the same antibody component but with different cytotoxic agents which can be categorized as a new product. As such, drug developers can market variants of branded biologics as a new product albeit at higher prices than biosimilar versions.

The authors mark payor behavior as also playing a significant role in biosimilar uptake. The payors, i.e., insurance companies, government health programs, Health Maintenance Organizations (HMOs), and Preferred Provider Organizations (PPOs), are responsible for negotiating drug reimbursement, which influences availability to patients. They are currently incentivized by higher rebates that tend to follow from originator biologic medicines which typically have higher listed prices than their biosimilar competitors. As in the case of pharmacy-dispensed medicines, which are controlled largely by pharmacy benefit managers (PBMs) who determine whether originator biologics or their biosimilar counterparts are listed on formularies, prices at the consumer level are highly variable. Similarly, the market size of biosimilars could be significantly impacted by the adoption of the Inflation Reduction Act (IRA). The IRA allows for Medicare to negotiate Maximum Fair Prices (MFPs) directly for high-spending drugs, which undermines one of the core benefits of biosimilars – the financially attractive price gap between biosimilars and their reference biologics. Of the 10 approved drugs currently listed for MFPs, 3 are biologics and none are biosimilars. Selectively narrowing the price gap between biosimilars and their reference biologics via price controls can be viewed as potentially dissuading developers further from investing.

Outlook

IQVIA estimates that avoiding the biosimilar void and achieving a fully competitive biosimilar market could bring to patients and the healthcare system approximately $189 billion in savings over the next decade. The author warns, however, that “[p]rogress toward a more sustainable biosimilar market requires re-assessment of current U.S. regulatory frameworks and market dynamics to facilitate access to biosimilars across all areas where biologic medicines exist and limit the magnitude of a biosimilar void.”

The impending expiration of patents for numerous biologics presents a significant opportunity for biosimilar manufacturers to enter the market. However, the complexity of the patent landscape necessitates a comprehensive strategy to navigate potential challenges effectively. A critical first step involves conducting thorough freedom-to-operate analyses to identify and assess existing patents that could impede biosimilar development. This process includes evaluating patent thickets—dense clusters of overlapping patents—that originator companies often establish to extend market exclusivity. By meticulously analyzing these thickets, biosimilar companies can develop strategies to challenge weak or non-essential patents, thereby facilitating earlier market entry. Additionally, engaging in the patent dance, a structured information exchange under the Biologics Price Competition and Innovation Act (BPCIA), allows for the early resolution of patent disputes, potentially expediting product launch. Furthermore, biosimilar companies should consider pursuing their own patent protections for unique manufacturing processes or formulations to strengthen their market position. By implementing these multifaceted patent strategies, biosimilar manufacturers can effectively capitalize on the upcoming wave of biologic patent expirations and enhance their competitiveness in the marketplace.

Disclaimer: The information contained in this posting does not, and is not intended to, constitute legal advice or express any opinion to be relied upon legally, for investment purposes or otherwise. If you would like to obtain legal advice relating to the subject matter addressed in this posting, please consult with us or your attorney. The information in this post is also based upon publicly available information, presents opinions, and does not represent in any way whatsoever the opinions or official positions of the entities or individuals referenced herein.

  1. https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/assessing-the-biosimilar-void-in-the-us ↩︎
  2. Implementation of the Biologics Price Competition and Innovation Act of 2009 | FDA ↩︎
  3. Gibofsky A, Evans C, Strand V. Provider and patient knowledge gaps on biosimilars: insights from surveys. Am J Manag Care. 2022 Nov;28(12 Suppl):S227-S233. Available from: https://www.ajmc.com/view/biosimilarssuppl-insightssurveys ↩︎
  4. Teeple A, Ellis LA, Huff L, et al. Physician attitudes about nonmedical switching to biosimilars: results from an online physician survey in the United States. Curr Med Res Opin. 2019;35(4):611-617. doi:10.1080/03007995.2019.1571296 ↩︎