Insurance Coverage of Biosimilars: How Prior Authorization and Tier Placement Block Affordability

When you’re prescribed a biologic drug like Humira for rheumatoid arthritis or Crohn’s disease, you might assume that a cheaper version-called a biosimilar-is your best bet. After all, biosimilars are FDA-approved to work just like the original, and they can cost 10-33% less. But if you’ve tried to fill a prescription for one, you’ve probably run into a wall: prior authorization forms, stacked tiers, and insurers treating the cheaper option like it’s just as expensive as the brand-name drug.

Why Biosimilars Are Still Hard to Get, Even When They’re Approved

Biosimilars aren’t generics. They’re complex proteins made from living cells, not chemicals. That’s why they cost more to develop than a simple pill. But once they’re approved-like Zarxio in 2015, or the eight adalimumab biosimilars that hit the market by 2023-they’re supposed to drive down prices. And they do. But insurance companies often make it harder to use them than to stick with the original.

In 2025, 99% of Medicare Part D plans put Humira and its biosimilars on the exact same tier. That means if Humira costs you $1,200 a month out-of-pocket, your biosimilar will cost $1,150. That $50 difference? Not enough to motivate most patients to switch, especially when the paperwork is the same.

And that paperwork? Prior authorization is required for 98.5% of plans covering both Humira and its biosimilars. Not one plan made the biosimilar easier to get. In fact, many require you to try the biosimilar first-step therapy-before approving the original drug, even if your doctor says you’ve already failed it.

How Tier Placement Kills Incentive to Switch

Insurance plans use tiers to control costs. Tier 1: cheap generics. Tier 4 or 5: expensive biologics. Biosimilars almost always land in Tier 4 or 5, the same as the brand-name drug. That’s not a mistake. It’s a strategy.

According to JAMA Network data from June 2024, only 1.5% of plans placed biosimilars on a lower tier than the reference product. That means patients pay the same coinsurance-often 25-33% of the drug’s list price-whether they take Humira or Cyltezo. If the drug costs $5,000 a month, you’re paying $1,250-$1,650 out of pocket. That’s a lot for anyone, but especially for seniors on fixed incomes.

Even worse: insulin biosimilars. Eight are approved. Only 10% of Medicare Part D plans cover them. Meanwhile, 80% cover the brand-name Lantus. Why? Because the manufacturer still pays rebates to pharmacy benefit managers (PBMs) to keep their product on formularies-even when cheaper alternatives exist.

What PBMs Are Really Doing (And Why)

Pharmacy Benefit Managers-Express Scripts, OptumRx, CVS Caremark-control which drugs get covered and at what cost. They’re not insurers. They’re middlemen paid by drugmakers to manage formularies. And they’ve got a conflict of interest.

They get paid based on rebates from brand-name drugmakers. So even when biosimilars are cheaper, they’re not always profitable for PBMs. That’s why, as of 2025, three major PBMs excluded Humira from their standard commercial formularies-but only because they wanted to force patients onto their preferred biosimilars. That’s not helping patients. It’s just swapping one gatekeeper for another.

Express Scripts, for example, removed Humira entirely from its 2025 formularies and placed three biosimilars on Tier 3-slightly better than Tier 4. But patients still pay 25% coinsurance. No copay. No discount. Just a slightly less expensive version of the same pain.

Doctors Are Spending Hours on Paperwork, Not Patients

A 2024 survey by the Alliance for Patient Access found that 78% of rheumatologists spend 3-5 hours a week just filling out prior authorization requests. That’s time they could be seeing patients. And it’s not just one form. Each drug, each change, each denial requires a new submission.

One case from the Rheumatology Advisor tells the story: a patient with severe rheumatoid arthritis was denied Humira because the plan required a 60-day trial of a biosimilar first. The patient waited 28 days. During that time, their joint damage worsened. The delay wasn’t clinical. It was administrative.

Specialty pharmacies are overwhelmed too. They handle 10-15 prior authorizations per patient per year for biologics. Many don’t have enough staff to keep up. Delays mean patients stop taking their meds. And that leads to hospitalizations, ER visits, and higher overall costs.

Why the U.S. Lags Behind Europe

In Europe, biosimilars make up over 80% of the market for drugs like Humira. In the U.S.? Just 23%. Why the gap?

European countries use centralized pricing and mandatory substitution. If a biosimilar is approved, it’s automatically available at lower cost. No prior authorization. No tier games. No rebates to block access.

In the U.S., it’s the opposite. PBMs and drugmakers have built a system where the most expensive option stays on top-not because it’s better, but because it pays the most.

The Congressional Budget Office estimates biosimilars could save the U.S. $54 billion over the next decade. But under current coverage rules? Only $1.8 billion. That’s a $52 billion gap. And it’s not because patients don’t want cheaper options. It’s because the system is designed to keep them from getting them.

What’s Changing in 2025 (And What’s Not)

There are signs of movement. The Office of Inspector General (OIG) called out the lack of tier differentiation in 2024. CMS responded by expanding its monitoring of formulary practices. Some PBMs are now excluding originator drugs entirely to push biosimilars.

But exclusion isn’t access. It’s coercion.

Real progress would mean:

• Biosimilars on lower tiers with lower coinsurance
• Eliminating prior authorization for biosimilars when the reference product is already approved
• Banning step therapy that forces patients to try a cheaper drug first, even if it’s clinically inappropriate
• Requiring PBMs to report how many biosimilars they cover-and at what tier

The Inflation Reduction Act gave CMS the power to enforce this. But so far, enforcement is light. No penalties. No audits. No public consequences for plans that treat biosimilars like second-class drugs.

What Patients Can Do Right Now

If you’re stuck with a high-cost biologic and your doctor recommends a biosimilar:

• Ask your doctor to write a letter of medical necessity explaining why the biosimilar is appropriate
• Call your insurer and ask: "Is the biosimilar on a lower tier? If not, why?"
• Request a formulary exception or appeal if your request is denied
• Check if your state has laws requiring biosimilar substitution at the pharmacy level

Some states, like California and New York, have passed laws allowing pharmacists to substitute biosimilars without prescriber approval-similar to generics. But even there, insurers can still block it with prior authorization.

Bottom line: the system isn’t broken. It’s working exactly as designed-to protect profits, not patients.

What’s Next?

Biosimilars are here to stay. By 2027, market share could hit 40% if PBMs keep excluding originators. But unless tier placement changes, patients won’t see real savings. And without real savings, the promise of biosimilars-lower costs, better access, fair competition-will remain just a promise.

Until then, if you’re paying $1,200 a month for a drug that could cost $800, you’re not getting a bargain. You’re getting a system that still treats cheaper as the same as expensive.