CMS Official Touts Cost Savings Through Generics, Biosimilars


Prescription drug costs are a significant challenge for Americans, who are paying medication prices higher than any comparable nation.

Promoting competition through the use of generic and biosimilar medications is one of the chief ways to lower prescription drug costs, a Centers for Medicare & Medicaid (CMS) official said at the GRx+Biosims 2021 Virtual Conference, held November 8 through November 10, 2021.

“The high cost of prescription drugs remains a significant challenge for the nation, as well as for our Medicare beneficiaries who rely on these therapies to prolong life and live a high quality of life,” said Kristi Martin, senior advisor to the deputy administrator at CMS, during the meeting’s keynote address.1 “If the prescription medicines are unaffordable…it presents a huge barrier.”

Americans pay medication prices that are “far higher than any comparable nation,” Martin noted. “A lack of competition is one of the reasons for these high costs.” As a result, many people don’t take medications as prescribed.

Increasing the adoption of biosimilar and generic medications is 1 of the primary ways to lower overall prescription drug costs, according to Martin.

“We know that promoting competition is one way to make prescription drugs more affordable. When the markets function well, competition from generics and biosimilar medicines provide tremendous value and cost savings to our patients and government programs,” Martin said.

Generics and biosimilars accounted for 90% of the prescriptions filled in the United States last year, but only amounted to 18% of the country’s spending on prescription drugs, she said.

“We are seeing biosimilar adoption starting to show promise, particularly in oncology, with nearly $8 billion in savings in 2020 alone,” Martin said, referring to the Association for Accessible Medicine’s (AAM) 2021 United States Generic and Biosimilar Medicines Savings Report.2 According to AAM, biosimilar drugs saved $7.9 billion in 2020, more than tripling the $2.5 billion saved in 2019.

Medicare beneficiaries also saved $109 billion through the use of generics and biosimilars, according to the report.

President Joseph R. Biden, Jr. has charged CMS with exploring payment models that support increased utilization of generic and biosimilar drugs and bringing more savings to Medicare and Medicaid beneficiaries, Martin said.

“As part of President Biden’s ‘Build Back Better’ initiative, we have a real opportunity to lower costs for American patients and their families by letting Medicare negotiate drug prices. And this has widespread bipartisan support,” she said.

Martin cited a Kaiser Family Foundation survey3 in which 88% of Americans—including 77% of Republicans—support allowing Medicare to negotiate prescription drug prices to lower the cost of medications.

Starting on January 1, 2023, Medicare enrollees will have access to real time formulary and benefit information so they can shop for lower-cost alternative therapies under their prescription drug benefit plan, according to CMS’s Contract Year 2022 Medicare Advantage and Part D Final Rule.4

As part of the final rule, CMS is also allowing Medicare Part D prescription drug plans to have a second “preferred” specialty tier with a lower cost sharing level than their other specialty tier.

“The change gives Part D plans more tools to negotiate better deals with manufactures and lower out-of-pocket costs for enrollees,” Martin said. “We anticipate this change will encourage competition and increase the use of biosimilars and generics.”


  1. Martin, K. CMS keynote address: Promoting competition through payment and coverage policy. Presented at: GRx+Biosims 2021 Virtual Conference; November 8-10, 2021; Virtual.
  2. 2021 U.S. generic and biosimilar medicines savings report. Association for Accessible Medicines. Published October 2021. Accessed November 24, 2021.
  3. Kirzinger A, Jearney A, Stokes M, Brodle M. KFF Health tracking poll—May 2021: Prescription drug prices top public’s health care priorities. June 3, 2021.
  4. Medicare and Medicaid programs; contract year 2022 policy and technical changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and programs of all-inclusive care for the elderly. January 19, 2021. Accessed November 24, 2021.
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