The first Humira biosimilar entered the European market in 2018. By 2020, the originator’s market share had collapsed to roughly 20 percent across major European countries. The first Humira biosimilar entered the United States market in January 2023. Twenty-one months later, the originator’s share remained above 70 percent. The molecules are the same. The disease is the same. The patients are the same. The systems that pay for the drugs are not.
The story of biosimilars in the United States is, in its sequencing and its outcomes, a story of how rebate economics distorts what the science would otherwise predict. The Biologics Price Competition and Innovation Act, passed as part of the 2010 ACA, created a regulatory pathway for biosimilars analogous to the Hatch-Waxman pathway for small-molecule generics. The first FDA-approved biosimilar, Sandoz’s Zarxio, launched in 2015. By 2024, the FDA had approved over 60 biosimilars across more than a dozen reference products, with cumulative price reductions that have meaningfully dented spending on certain biologics, particularly in the hospital-administered space.
But the macro-level success masks a structural strangeness that becomes more pronounced the longer one looks at the data. Biosimilars administered in hospital outpatient settings—infliximab, bevacizumab, trastuzumab, rituximab—have achieved adoption rates that approach European norms within a few years of launch. Biosimilars dispensed through retail pharmacy or specialty pharmacy channels, where rebate architecture is dense and PBM intermediation more pronounced, have lagged badly. The dividing line is not clinical. It is financial.
Consider the Humira example, which has become the canonical case. When Amgen’s Amjevita, the first Humira biosimilar, launched in January 2023 at a 55 percent discount to Humira’s list price, payers were expected to move quickly. Several biosimilar manufacturers followed at deeper discounts within months. By mid-2024, Humira’s gross list price was being undercut by biosimilars priced as much as 85 percent lower. The expectation was a Humira market share collapse on European timelines. What happened instead was that the major PBMs initially excluded biosimilars from preferred formulary tiers, citing the existing manufacturer rebates on Humira. CVS Caremark’s decision in April 2024 to remove Humira from its national formulary in favor of biosimilars produced a sharp inflection in market share, but the move came nearly fifteen months after the first biosimilar launch—a delay during which AbbVie’s rebated cash flow on Humira was effectively undisturbed.
What the Humira episode demonstrated is the rebate trap in its purest form. AbbVie, the manufacturer of Humira, had built its commercial relationships with PBMs around a structure of large rebates contingent on preserving Humira’s preferred formulary status across most of a PBM’s covered lives. Switching to a biosimilar at lower list price meant losing those rebates. The arithmetic for a PBM was not, as one might naively expect, a comparison between Humira’s net price and the biosimilar’s net price. It was a comparison between Humira’s rebated revenue contribution to the PBM and the biosimilar’s. The biosimilar typically lost. So Humira stayed.
The interchangeability designation, created by the BPCIA as a way for biosimilars to be substituted at the pharmacy counter without prescriber intervention, has not done the work it was expected to. As of late 2024, only a small subset of approved biosimilars had received interchangeable status, and even those that did saw uneven adoption. Several state pharmacy boards have implemented their own substitution rules that interact awkwardly with FDA’s interchangeable designation. The FDA itself has begun to reconsider the interchangeability standard, arguing in 2024 that the additional clinical data required for interchangeability has not produced safety benefits proportionate to its cost in development time and biosimilar entry delays. If the agency simplifies the standard, more biosimilars will achieve interchangeable status. Whether this changes pharmacy-counter substitution behavior in any material way remains an open question.
Europe’s biosimilar success is sometimes presented in American policy debates as the result of single-payer purchasing power and tendering systems unavailable in the US market. There is some truth to this, but it underspecifies the mechanism. European biosimilar adoption has been driven less by central price negotiation than by the absence of a rebate architecture between manufacturers and intermediaries. In a system where pricing is essentially transparent and where formulary placement does not generate side payments, the price difference between an originator and a biosimilar is the relevant decision variable for the payer. In a system where formulary placement generates rebates that themselves vary with placement, the price difference is one input among several, and often not the most consequential one.
There is a parallel European cautionary tale that American observers cite less often. The aggressive biosimilar adoption that produced 80 percent share shifts within two years also produced documented manufacturer exits from biosimilar markets when prices fell below sustainable production costs. Several biosimilar manufacturers in Europe withdrew products in the late 2010s after the rapid price collapse left no margin for the multi-million-dollar investment required to maintain comparator analytical and clinical infrastructure. The lesson is that biosimilar adoption can outpace the underlying market’s capacity to support the manufacturers, which then exits, which then reduces competition. The optimization problem here is more delicate than ‘lower prices, more competition’ makes it sound.
The American payer environment, particularly the largest commercial PBMs and Medicare Part D plans, has begun to move on biosimilars more decisively in 2024 and 2025, partly in response to FTC scrutiny and partly because the rebate calculus has finally tipped on certain reference products. Several large self-insured employers have explicitly required their PBMs to use biosimilar-first formularies, with the originator available only on prior authorization for specific medical indications. The early data from these employers shows precisely the savings that biosimilar economics would predict. The early reaction from the originator manufacturers has been to lower their net prices through deeper rebates—an action that, while it reduces nominal spending, also preserves the rebate-driven formulary architecture for whatever the next biologic patent expiration brings.
The bigger question for the next decade is whether biosimilar uptake patterns will improve as the patent cliff hits the largest biologics in sequence. Stelara biosimilars launched in early 2025; Eylea, Prolia, and several other major biologics face biosimilar competition through 2026 and 2027. Whether the lessons of Humira translate—which is to say, whether payers will move faster on the second wave because the incentives have been clarified—is something the industry is watching closely. The original Humira biosimilar transition was, in effect, a stress test of the American biosimilar pathway. The pathway passed the test in the narrow technical sense that biosimilars eventually achieved meaningful share. It failed the more demanding test of doing so on a timeline consistent with the public investment in creating the regulatory pathway in the first place.
What the biosimilar story reveals, more clearly than perhaps any other drug pricing question, is that the architecture of a market matters more than the technology of its products. The molecules are the easy part. The decision-making structure that translates a 70 percent price reduction into actual purchasing behavior is the hard part. The United States has built a regulatory pathway capable of producing biosimilars at world-class scientific standards. It has not, so far, built the market architecture in which those biosimilars can fully matter. Whether the second wave of patent cliffs forces that change, or whether the rebate trap absorbs another decade of innovation, will depend on choices that are political and contractual rather than scientific. The science already worked.
