As healthcare costs continue to rise, North Carolina lawmakers face a difficult and increasingly ongoing challenge: how to preserve quality health coverage for more than 750,000 teachers, state employees, retirees and their families without asking taxpayers to spend more or patients to pay higher premiums and out-of-pocket costs.
The financial pressures are real. Just last year, North Carolina officials confronted a projected $507 million deficit in the State Health Plan for Teachers and State Employees.
While lawmakers and the State Health Plan Board took steps to close that gap through premium adjustments, state budget funding, and benefit changes — and there’s more work to be done to address ongoing structural budget problems — the episode underscored a larger reality: rising healthcare costs are straining the plan’s finances.
That’s why policymakers should welcome reforms — such as greater use of FDA-approved biosimilars — that reduce state spending without cutting benefits or asking patients to pay more.
A new analysis from the Pacific Research Institute Center for Medical Economics and Innovation estimates that North Carolina could save between $31.0 million and $62.8 million annually simply by giving greater priority to lower-cost biosimilars when they are already available.
Those savings won’t solve every budget challenge facing the State Health Plan, but they would provide lawmakers with something increasingly rare in public policy: a way to reduce spending without reducing benefits for state employees or limiting access to important treatments. For a state that rightly prides itself on fiscal discipline, that’s an opportunity worth serious attention.
The key is understanding what biosimilars are — and the future promise they hold for taxpayers and patients alike.
Biosimilars are the equivalent of generic medicines for many of today’s most advanced prescription drugs whose patents have expired. Clinically, they are the same as complex biologic medicines and must satisfy the FDA’s rigorous standards demonstrating that they are just as safe and effective as the original biologics.
Biologic medicines have revolutionized treatment for serious illnesses including cancer, rheumatoid arthritis, Crohn’s disease, multiple sclerosis, and other autoimmune disorders. These medicines have dramatically improved patients’ lives, but they are also among the most expensive drugs purchased by health plans.
After patents on the expensive originator biologic medicines expire, manufacturers of FDA-approved biosimilars are allowed to compete. This gives patients access to the same high-quality treatments at a much lower cost. More competition means lower drug spending for health plans, taxpayers, and patients alike.
While biosimilar competition is only available nationwide on a few biologic medications, the initial competition is producing impressive results. To date, biosimilars have generated more than $56 billion in healthcare savings since entering the market.
For fiscal conservatives, the appeal should be obvious.
As more biologic drugs lose patent protection over the coming years, policymakers in North Carolina and across the country have an opportunity to harness competition to bring down public employee health care costs — without sacrificing quality or access to care.
Too often, elected officials respond to rising healthcare costs by proposing government mandates, price controls, or policies that ultimately discourage future medical innovation. Those approaches may create the appearance of savings in the short term, but they often reduce patient choice and weaken incentives to develop tomorrow’s breakthrough medications.
When patients are denied access to the most effective medications, they receive less efficacious treatments that will ultimately cost taxpayers more in the long run as these patients will inevitably need more surgeries and clinic-based treatments.
Encouraging biosimilars takes a different approach, relying on competition instead of regulation. It lowers costs without limiting treatment options. And it allows taxpayers to benefit from lower prices while preserving incentives for future innovation.
North Carolina’s healthcare challenges will not disappear overnight. But policymakers should welcome solutions that improve efficiency before asking hard-working taxpayers to sacrifice more. Expanding access to biosimilars is exactly that kind of reform — a practical, market-driven policy that strengthens the State Health Plan, protects taxpayers, and preserves high-quality care.
When government can save tens of millions of dollars annually without reducing benefits or asking patients to pay more out of pocket, that’s not just good health policy. It’s good government.
Download the new study at www.medecon.org.
