New Study: States Could Save Up to $1.8 Billion Annually by Prioritizing Lower-Cost Biosimilar Medicines

Pacific Research Institute analysis finds taxpayers and state employees could benefit from greater use of safe, effective alternatives to expensive biologic drugs

SACRAMENTO, Calif., July 7, 2026 /PRNewswire/ -- At a time when states across the country are grappling with significant budget challenges, a new study from the Center for Medical Economics and Innovation at the Pacific Research Institute – the nonpartisan, California-based, free market think tank – finds that state employee health plans could save up to $1.8 billion every year by making greater use of lower-cost biosimilars.

Click to download the study, The Biosimilar Savings Opportunity: Prioritizing Biosimilars Will Generate Significant Savings for State Employee Health Plans

"States are looking everywhere for ways to control costs without cutting services or reducing benefits," said Dr. Wayne Winegarden, director of the Center for Medical Economics and Innovation and author of the study. "Prioritizing biosimilars is one of the rare policy opportunities that benefits everyone. Taxpayers save money, state budgets become more sustainable, and employees get access to effective treatments they need."

Biosimilars are medicines that are highly similar to existing biologic drugs, which are complex treatments used to treat serious conditions such as cancer, rheumatoid arthritis, Crohn's disease, psoriasis, and other autoimmune disorders. Like generic drugs, biosimilar competition is introduced after patents expire, helping lower costs while maintaining access to drugs with the same clinical effectiveness and safety standards as the originals.

According to the study, biosimilars have already generated more than $56 billion in savings nationwide since their introduction. Yet many state employee health plans still do not prioritize their use, leaving substantial taxpayer savings on the table.

The study estimates that state employee health plans spent roughly $20 billion on originator biologic medicines in 2024. By increasing the use of lower-cost biosimilars in markets where they are already available, states could generate savings ranging from nearly $900 million annually under a conservative scenario to almost $1.8 billion annually under a more aggressive adoption strategy.

• California alone could save up to $179 million annually, while large states such as Texas, Florida, and New York could each save well over $100 million under higher-adoption scenarios.

Biosimilars are often dramatically less expensive than their brand-name biologic counterparts. In some therapeutic categories, the lowest-priced biosimilars cost 75 to 90 percent less than the original products while delivering comparable patient outcomes.  The potential to achieve similar savings will grow higher in coming years with the expiration of several patents on originator biologics.

"With more than 100 biologic medicines expected to lose patent protection over the next decade, the opportunity for additional savings will only grow," Winegarden added. "States that embrace biosimilar competition now can improve the long-term fiscal health of their employee health plans while preserving access to high-quality care."

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SOURCE Pacific Research Institute