Hospital Adoption and Pricing for Oncology Biosimilars

Importance: Many physician-administered oncology biologics are losing patent protection in the coming years and will face competition from biosimilars. Hospitals and insurers share a mutual interest in developing payment methods that share the potential savings from adopting these less costly agents. Objective: To test whether hospitals paid lower acquisition prices and earned higher markup margins for physician-administered oncology biosimilars; whether insurers reduced the reimbursement prices they paid to hospitals, thereby sharing in the savings from lower manufacturer prices; and whether reductions in acquisition prices and increases in hospital margins were associated with accelerated adoption of biosimilars. Design, Setting, and Participants: Observational study using 2020-2024 data for patients covered by Blue Cross Blue Shield health insurance, linked to information on drug acquisition prices paid by hospitals to manufacturers; drug reimbursement prices paid by insurers to hospitals; hospital eligibility for federal 340B price discounts; and other hospital, patient, and market characteristics. Exposures: Biologics and biosimilars acquired by hospitals from manufacturers at one price and reimbursed by private insurers at a higher price. Main Outcomes and Measures: Acquisition prices paid by hospitals to manufacturers, reimbursement prices paid by insurers to hospitals, hospital drug price markup margin, hospital adoption of biosimilars. Results: Between 2020 and 2024 (66 139 patients who received oncology biologics and biosimilars in 1541 hospitals), acquisition prices paid by hospitals to drug manufacturers declined by 60%, 72%, and 63% for the biosimilars of bevacizumab, trastuzumab, and rituximab, respectively. The reimbursement prices paid by insurers to hospitals declined more slowly, at 32%, 36%, and 34%, allowing an increase in hospital markup margins. In multivariable regression analyses, each additional dollar of acquisition price was associated with $2.72 in higher hospital reimbursement for bevacizumab (95% CI, $0.51-$4.93), $1.82 for trastuzumab (95% CI, $1.27-2.38), and $2.32 for rituximab (95% CI, $1.56-$3.09). Increases in hospital markup margins were associated with increased adoption of biosimilars, rising from a 32%, 37%, and 18% share of bevacizumab, trastuzumab, and rituximab use in 2020 to 93%, 87%, and 84% by 2024. Conclusions and Relevance: Hospital price markup margins from the administration of oncology biosimilars have increased over time and have been accompanied by large increases in the utilization of these therapies.