Modeling Policy Proposals for Medical Benefit Biosimilar Reimbursement in the U.S.

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An analysis of average sales price and provider net cost recovery dynamics

Feb 26, 2026

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Modeling Policy Proposals for Medical Benefit Biosimilar Reimbursement in the U.S.

Report Summary

Spending on biologic medicines in the United States has grown rapidly, reaching $262 billion in 2024 and representing more than half of total medicine spending. As high-cost biologics lose patent protection, biosimilars offer an opportunity to enhance competition and generate savings while maintaining clinical outcomes. However, biosimilars reimbursed under the medical benefit operate within a complex and evolving reimbursement environment that may threaten their long-term viability. Without policy changes, these pressures could dampen future biosimilar investment, prompt market exits, reduce system-wide savings, and limit treatment options for patients and providers.

This report assesses five policy approaches designed to address these challenges through modifications to ASP-based reimbursement for medical benefit biosimilars, including smoothing ASP calculations across quarters, extending WAC-based reimbursement at launch, increasing add-on payment percentages, establishing minimum reimbursement floors, and redefining ASP to exclude certain discounts. Using historical ASP data and modeled estimates of provider cost recovery, the analysis evaluates how each proposal may affect providers, manufacturers, payers, and overall healthcare spending. The findings aim to inform industry stakeholders as well as policymakers as they weigh reforms that support near-term savings while sustaining a competitive and durable biosimilar market over time.

Key Findings

While the healthcare system, CMS, and payers have seen savings due to the introduction of biosimilars, manufacturers and providers (i.e., hospitals, clinics, and other medical institutions providing these medicines) may be disincentivized to develop or switch to biosimilars due to dynamics present in the current ASP and reimbursement system.
Among the five candidate policy proposals modeled in this report, two policies are most promising for solving long-term sustainability issues with the medical benefit biosimilar system: the first is the implementation of ASP floors for reimbursement, which would help prevent ASP spirals and financial unsustainability for biosimilar manufacturers, and the second is the removal non-provider discounts from the ASP calculation, improving provider net cost recovery dynamics and incentivizing biosimilar uptake.
While these two proposals individually may not address all of the issues seen across markets, a combination of the two may be the most promising in addressing overarching challenges faced across stakeholders.
In a combined policy scenario (with the implementation of an ASP floor and the removal of non-provider discounts from the ASP calculation), modeled results show that an estimated 77% (combined policies apply to biosimilars only) or 63% (combined policies also apply to originators) of historical health system savings would still be realized in the short run across molecules of interest.
Policymakers will need to ensure that any policy reform ensures that all of the stakeholders involved (providers, manufacturers, payers, and patients) are appropriately motivated and able to continue participating, while savings are still realized to the healthcare system overall.

Other Findings

Under the current system, provider net cost recovery can be unfavorable due to constantly declining reimbursement and the inclusion of non-provider discounts in the ASP calculation; additionally, biosimilar manufacturers can fall into ASP spirals due to continuous discounting and eventually exit markets if uptake is limited or financial viability is unsustainable.
The implementation of ASP floors would provide a guaranteed minimum reimbursement for providers, meaning that their net cost recovery for biosimilars would increase or stay positive once the floor is reached because the floor only impacts reimbursements and not acquisition costs.
The removal of non-provider discounts from the ASP calculation would improve provider net cost recovery for biosimilars and help ensure that providers are not incentivized to use more expensive products to receive higher reimbursements, especially in markets where non-provider discounts are substantial.

A combination of the two most promising policy proposals would implement an ASP floor for reimbursements, helping to prevent ASP spirals and financial unsustainability for manufacturers, and would also remove non-provider discounts from the ASP calculation, improving provider net cost recovery dynamics and incentivizing biosimilar uptake.
When an ASP floor is implemented and non-provider discounts have been removed from the ASP calculation, provider net cost recovery for biosimilars are improved both at biosimilar launch and when the floor is reached.
Even though an ASP floor only applies to provider reimbursement (manufacturers would still be able to provide discounts below this floor if needed), a guaranteed minimum reimbursement for providers may provide some relief to manufacturers in the need to give out discounts and halt the ASP spiral.

When looking across five biologics of interest (infliximab, pegfilgrastim, rituximab, trastuzumab, and filgrastim) who have historically seen multiple biosimilar entrances, an estimated total of 77% of realized savings would still have been maintained if the combined policy scenario and share shifting were in place.
In total, an estimated $148Bn would have been spent on these molecules if biosimilars never entered these markets (assuming originator ASPs remained the same); with biosimilars’ entrances, an estimated $52Bn was saved as ASPs declined, yielding a total spend estimate of $96Bn.
With the combined policies and share shifting implemented, $40Bn would still have been saved across all five molecules, and the remaining $12Bn could be seen as an investment to promote a more sustainable system for medically reimbursed biosimilars.
The percentage of total health system savings maintained reduces from 77% when the combined policies apply only to biosimilars, to 63% when the combined policies apply to both biosimilars and originators; policymakers would need to decide on whether these policies would also apply to originators based on fairness to originators and prioritization of healthcare system savings.

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Report Summary

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