Evaluating biologic drug costs: Medicare negotiated prices versus biosimilar competition

The Inflation Reduction Act (IRA) has reshaped how Medicare covers and reimburses prescription drugs. For the first time, the federal government established prices for ten drugs selected through the Medicare Drug Price Negotiation (MDPN) Program, effective January 1, 2026.

In November 2025, the Centers for Medicare and Medicaid Services (CMS) announced that three of the ten drugs selected for the 2026 MDPN cycle will no longer have government-set prices in 2027 due to biosimilars or generics entering the market. Of the three 2026 MDPN cycle drugs slated to leave the program, Stelara (ustekinumab) is the only biologic. Its exit from the MDPN reflects growing tension between government set prices and market driven competition as biosimilars come online. Against this backdrop, CMS has continued selecting additional drugs for negotiated pricing through 2028, including biologics under physician-administered or Part B drugs. Notably, seven of the 15 selected drugs for the 2028 MDPN cycle are biologics, many of which reportedly have biosimilars in development.

As additional selected drugs approach potential biosimilar competition, we evaluate the January 2026 Medicare Part D formulary coverage and cost sharing for the biologic drug and its biosimilars. We assess whether beneficiaries and the federal government appear to spend more or less on the biologic subject to a price control compared to biosimilars priced through the private market.

Medicare estimates and key findings

Based on the formulary coverage and expected cost sharing, we estimate what Medicare beneficiaries would have paid for the biologic with a price control relative to biosimilar competitors, whose prices are set through the private market. Several ustekinumab biosimilars are less expensive for beneficiaries than the biologic under the MDPN, with lower beneficiary cost sharing for those medicines. However, formulary coverage is more limited compared to the biologic.

Where a drug is likely to face near-term competition, the time and administrative cost associated with establishing an MDPN may not, in some circumstances, yield the lowest-cost option for patients or save money for the federal government. Other research has indicated that larger markets may attract biosimilar and generic competition, which may place downward pressure on prices for the biosimilars and generics entering the market.[1] [2]

While not all patients can take, or wish to take, a biosimilar, these medicines may present an option for market-based cost containment in Medicare. Policymakers evaluating MDPN implementation may wish to consider how impending competition affects beneficiaries' costs and federal spending. Policymakers may also consider whether modifications to the IRA could help to sustain affordable access to biologic medicines in Medicare while minimizing distortions in the private market.

Background

The IRA directs the federal government to set the Maximum Fair Prices (MFPs) for selected medicines in Medicare Part D (i.e., self-administered drugs, such as pills), with later expansion to Medicare Part B (i.e., physician-administered drugs, such as intravenous infusions), through the MDPN. Once the MFP is in effect, that drug must be covered on Medicare Part D plan formularies. Products are removed from MFP applicability if there is bona fide marketing of a generic or biosimilar competitor, which has occurred for three of the first ten selected drugs in 2027.[3] To determine whether there is bona fide marketing, CMS considers multiple sources, including prescription drug event data.[4]

A formulary is the mechanism drug plans use to determine which drugs are covered and how beneficiaries’ cost-sharing is structured. In Medicare Part D, “specialty” drugs may be placed on a specialty tier, typically tier 4 or higher. Beneficiaries then generally pay co-insurance, or a percentage of the non-discounted price of the drug, typically at 25 to 30 percent. This is a less predictable cost as it is a percentage of the price rather than a fixed amount.[5]

Biologic drugs are made from living matter, distinguishing them from chemical-based pills. They cannot be copied exactly; when the exclusive right to market a biologic medicine has expired, another firm may develop and seek approval for a “biosimilar.” Approved biosimilars have no clinically meaningful differences relative to the biologic. While US Food and Drug Administration (FDA) approval for biosimilars is less complex than for a new drug, biosimilars generally cost hundreds of millions of dollars to develop.[6] Biosimilars often enter the market at a reduced price compared to the reference product, and their entry into the marketplace places downward pressure on prices.[7]

Methodology: Formulary analysis

Below, we evaluate Medicare formularies for Stelara and biosimilars in 2025 and 2026. Data was sourced from publicly available CMS formulary files. Our methodology is described in the endnotes.[8] [9] [10] [11]

Findings

In 2026, four ustekinumab biosimilars have coverage in 1 percent or more formularies and when covered are offered with a co-pay in 5 to 88 percent of plans’ formularies. In the remaining plans’ formularies that cover these drugs, beneficiaries pay co-insurance of 28 to 30 percent of the drugs’ list price. Coverage for the original biologic ustekinumab has declined by 8 percent in 2026 relative to 2025 on Part D formularies, and no plan covers the originator biologic drug with a co-pay.

We highlight the four biosimilars with formulary coverage greater than 1 percent for reference.

Table 1: Comparison of formulary access: January 2025 to January 2026 (CMS plan files)

Medicare Part D formulary access evaluation: Biologic and biosimilar 2026

Product	Generic name	Percent of formularies covering		Percent of formularies with co-pay (when covered)		Average co-pay (when covered on formulary with co-pay)		Average co-insurance (when covered on formulary with co-insurance)
		2025	2026	2025	2026	2025	2026	2025	2026
Stelara	ustekinumab	100%	92%	0%	0%	N/A	N/A	30%	28%
Otulfi	ustekinumab-aauz	0%	18%	0%	88%	N/A	$45	0%	30%
Selarsdi	ustekinumab-aekn	0%	34%	0%	31%	N/A	$42	0%	29%
Wezlana	ustekinumab-auub	0%	3%	0%	0%	N/A	N/A	0%	31%
Yesintek	ustekinumab-kfce	0%	0%	0%	33%	N/A	$44	0%	28%
Steqeyma	ustekinumab-stba	0%	73%	0%	5%	N/A	$42	0%	28%
Pyzchiva	ustekinumab-ttwe	0%	0%	0%	5%	N/A	$40	0%	28%

* Prices for 1 ml of 90mg/ml (1 syringe)

** Co-insurance would exceed the out-of-pocket maximum, so the estimated cost is set to $2,100

Interchangeable designation FDA Purplebook for 90mg/ml syringe

(a) Maximum Fair Price set by CMS

(b) Price reported by GoodRx

(c) No price listed in GoodRx; company press release reported a price 85-percent lower than Stelara, calculated relative to the pre-MFP price

(d) Calculated as the list price times the average co-insurance rate

Next, we determine list prices for the biologic and its biosimilars. These prices do not reflect any privately negotiated discounts or rebates, and they may exceed the prices paid by the Medicare Part D plans. For example, one analysis estimated pre-MFP discounts of 19 percent for the originator biologic Stelara in 2023.[12]

We find that the list prices for all biosimilars are between $3,400 and $6,000 lower than Stelara, the ustekinumab biologic, with an MFP. Due to lower list prices, the co-insurance for the biosimilars is $800 to $1,300 lower than for the biologic under price control.

Compared to the co-pay cost in Table 1, for beneficiaries with access to a biosimilar in a plan with a co-pay, out-of-pocket costs are roughly $2,050 lower than the estimated cost of a prescription for Stelara with the $2,100 out-of-pocket limit.

Table 2: Estimated prices and costs to beneficiary (CMS plan files and list prices)

Medicare Part D formulary access evaluation: Biologic and biosimilar 2026

Product	Generic name	Percent of formularies covering (2026)	Percent of formularies with co-pay (when covered) (2026)	Average co-pay (when covered on formulary with co-pay) (2026)	Average co-insurance (when covered on formulary with co-insurance) (2026)	Cost*	Cost source	Estimated co-insurance payment (d)
Stelara	ustekinumab	92%	0%	N/A	28%	$8,980	(a)	$2,100
Otulfi	ustekinumab-aauz	18%	88%	$45	30%	$3,618	(b)	$1,067
Selarsdi	ustekinumab-aekn	34%	31%	$42	29%	$4,174	(b)	$1,219
Wezlana	ustekinumab-auub	3%	0%	N/A	31%	$5,562	(b)	$1,696
Yesintek	ustekinumab-kfce	0%	33%	$44	28%	$3,033	(b)	$840
Steqeyma	ustekinumab-stba	73%	5%	$42	28%	$4,591	(c)	$1,304
Pyzchiva	ustekinumab-ttwe	0%	5%	$40	28%	$4,147	(b)	$1,169

* Cost for 1 ml of 90mg/ml (1 syringe)

** Co-insurance would exceed the out-of-pocket maximum, so the estimated cost is set to $2,100

(a) Maximum Fair Price set by CMS

(b) Price reported by GoodRx

(c) Not listed in GoodRx; company press release reported a price 85-percent lower than Stelara, calculated relative to the pre-MFP price

(d) Calculated as the list price times the average co-insurance rate

Biologic drugs selected for 2028 MDPN: Biosimilars in development

While seven of the 15 selected drugs for the MDPN 2028 cycle are biologic medicines, CMS did not select biologics for 2027. Accordingly, we reviewed publicly available information about the 2028 cycle selections to identify information about biosimilars in development. We found that one of the selected biologics in 2028 has an approved biosimilar; for the others, we found evidence of ongoing development programs in the US for five biologics, as well as in Europe or Asia. This information does not necessarily indicate that an approved biosimilar with bona fide marketing will be available as of 2028, when the MDPN prices would go into effect (data on file).

Conclusion

Some estimates indicate that MFPs would result in a $6.4 billion reduction in net Medicare spending for the selected drugs for 2026 in one year. Of that, 19 percent of the savings come from the three drugs (Entresto, Stelara, and Xarelto) that will no longer have an MFP in 2027 due to biosimilar or generic competition.[12]

We assessed spending by patients and the federal government on a biologic drug that faces biosimilar competition. Our findings show that biosimilars are priced lower and require less cost sharing compared to the price set by the federal government, not considering any additional confidential discounts from manufacturers to drug plan sponsors.

As the IRA is implemented, it may be useful to compare the savings generated by private‑market competition from generics and biosimilars with the savings to the Medicare program resulting from federal price intervention. Since not every patient may be treated with a biosimilar or a generic alternative, policy discussions may focus on how to preserve access and choice while encouraging lower-cost options.

The effects of the MDPN may also be considered in the context of incentives to develop drugs, such as biosimilars and secure supply chains. As the IRA takes effect, policymakers and administrators at CMS may observe changes in drug development and market trends and consider options to ensure beneficiary access to affordable medications.

Limitations

This analysis does not address other IRA provisions that affect beneficiary costs, including an out-of-pocket cost maximum, changes to the Medicare benefit design, federal subsidies, penalties for price inflation, and price caps on insulin.

Further, drug plans and manufacturers may have existing rebate agreements for certain drugs, including biologics and biosimilars; we do not account for these rebates in our analysis. Rebates may reduce the net cost of the drug, thereby lowering total plan expenditures, beneficiary costs through lower premiums or cost sharing, and federal costs.

Finally, current evidence of development programs does not indicate that approved biosimilars will be developed for the US market.

Learn more

For more information, please contact the authors.

Data on file. 

 

^{[1] IQVIA Assessing the Biosimilar Void in the U.S. Achieving Sustainable Levels of Biosimilar Competition, February 3, 2025.
[2] Jofre-Bonet M, McGuire A, Dayer V, Roth JA, Sullivan SD. The Price Effects of Biosimilars in the United States. Value in Health. 2025;28(5):742-750. doi:10.1016/j.jval.2025.02.008.
[3] CMS announced the removal of Entresto, Stelara, and Xarelto from the selected drugs list effective January 1, 2027 after determining that at least one approved generic or biosimilar version of each drug is marketed.
[4] CMS Medicare Drug Price Negotiation Program: Final Guidance, Implementation of Sections 1191 – 1198 of the Social Security Act for Initial Price Applicability Year 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028.
[5] Costing $950 or more per month in 2024.
[6] Ranbhor R, Kulkarni P. Evaluating Biosimilar Development Projects: An Analytical Framework Utilizing Net Present Value. Biologics. 2025 Mar 25;19:125-135. doi: 10.2147/BTT.S514767. PMID: 40165807; PMCID: PMC11955401.
[7] HHS FACT SHEET: Bringing Lower-Cost Biosimilar Drugs to American Patients https://www.hhs.gov/press-room/fact-sheet-bringing-lower-cost-biosimilar-drugs-to-american-patients.html.
[8] We evaluated 331 formularies in 2021, 300 in 2024, 260 in 2025, and 201 in 2026. This includes formularies from 4,539 plans in 2021; 4,671 plans in 2024; 4,189 in 2025; and 3,729 in 2026. CMS Formulary Files.
[9] We collected all unique Concept Unique Identifier (RXCUI) codes, which is a system for uniquely identifying drugs, to then identify all unique National Drug Codes (NDC) codes. The NDC codes were then used to identify whether a drug is covered on a given formulary (using the plan information data and basic drug formulary data). Useful explanation provided by NIH and Duke University.
[10] When a drug is “on formulary,” that means it is covered within the plan’s benefit, and expenses for that drug count toward deductibles and other out-of-pocket limits. For an explanation, see here.
[11] We matched these drugs to the formulary file with NDC codes identified through Prescription Drug Data Collection Code (RxDC).
[12] Brookings, “Impact of federal negotiation of prescription drug prices.”}