Insurance Coverage of Biosimilars: Prior Authorization and Tier Placement Strategies
When you’re prescribed a biologic drug for rheumatoid arthritis, Crohn’s disease, or psoriasis, the cost isn’t just about the price tag on the bottle. It’s about whether your insurance will cover it, how much you’ll pay out of pocket, and whether you’re forced to try a cheaper version first-even if your doctor says it’s not right for you. That’s where biosimilars come in. These are not generics. They’re not copies. They’re highly similar versions of complex, living-cell-based medicines that cost tens of thousands of dollars a year. And yet, despite being approved by the FDA and proven safe and effective, most insurance plans treat them the same as the original drug-making it harder, not easier, for patients to switch.
Why Biosimilars Are Different from Generics
Generics are simple chemical copies of brand-name pills. Biosimilars? They’re made from living cells-like yeast or hamster ovary cells-grown in labs to mimic proteins in the human body. That means no two batches are exactly alike, even if they’re made by the same company. The FDA requires biosimilars to show no meaningful difference in safety, purity, or potency compared to the original biologic. That’s why they’re approved. But unlike generics, which can be automatically substituted by pharmacists, most biosimilars can’t be swapped without a doctor’s OK. Only a few have been designated as "interchangeable," and even those are rarely used because of insurance rules.
Take adalimumab, the active ingredient in Humira. It’s one of the most prescribed biologics in the U.S., costing up to $5,000 per month. Eight biosimilars are now approved. But in 2025, only half of Medicare Part D plans cover any of them. And when they do, they’re usually placed on the same expensive tier as Humira. That means patients pay the same high coinsurance-often 33% of the drug’s list price-no matter which one they take. So even if the biosimilar costs 15% less, the patient’s out-of-pocket bill barely budges.
Prior Authorization: The Hidden Gatekeeper
Nearly every insurance plan that covers biologics requires prior authorization. That’s a paperwork hurdle where your doctor has to prove you’ve tried other treatments first, show lab results, and explain why you need this specific drug. For Humira and its biosimilars, 98.5% of plans require this step. And here’s the kicker: not one plan makes it easier to get a biosimilar approved. The process is identical. You still need to prove you’ve failed other therapies. You still need to wait 3 to 14 days for approval. Your rheumatologist spends hours on the phone with insurers instead of with you.
A 2024 survey found that 78% of rheumatologists spend 3 to 5 hours a week just managing prior authorizations. That’s not just frustrating-it delays care. One patient with severe rheumatoid arthritis waited 28 days to start treatment because her plan forced her to try a biosimilar first, even though her doctor said she’d already tried similar drugs with no success. By the time she got approved for the biologic she needed, her joints had worsened. That delay? It’s common.
Tier Placement: The Cost Trap
Insurance plans use tiers to control costs. Tier 1 is cheap generics. Tier 4 or 5 is where biologics live. These are specialty tiers, and they’re expensive. Patients pay a percentage of the drug’s price-not a flat copay. So if Humira costs $4,800 a month, and your plan charges 33% coinsurance, you pay $1,584. A biosimilar might cost $4,100. You pay $1,353. That’s a $231 difference. Not enough to make most patients switch, especially when the process is the same, the side effects are nearly identical, and your doctor didn’t recommend it.
Only 1.5% of plans put biosimilars on a lower tier. That’s less than one in 60. Meanwhile, major pharmacy benefit managers (PBMs) like Express Scripts, OptumRx, and CVS Caremark have started excluding Humira entirely from their formularies. Why? To force patients toward biosimilars. But that’s not always better. If the biosimilar is still on a high tier, you’re just paying the same high price for a different name. And if your doctor doesn’t have a preferred biosimilar, or your insurer doesn’t cover the one your doctor wants to prescribe, you’re stuck.
Why Are Insurers Holding Back?
On paper, biosimilars should be a win-win: lower costs for insurers, lower out-of-pocket for patients, more access to life-changing treatments. But the reality is messier. PBMs and insurers get rebates from the makers of original biologics-sometimes hundreds of millions of dollars a year. Those rebates are baked into their profits. Switching to biosimilars, which offer little to no rebate, cuts into that income. So even though biosimilars are cheaper to produce, the financial incentive to push them is weak.
Former FDA Commissioner Dr. Scott Gottlieb called this an "artificial barrier" created by the system. The Federal Trade Commission agrees, saying restrictive formulary designs are slowing down competition. Meanwhile, PBMs argue that tier alignment reflects clinical equivalence-not anti-competitive behavior. But if they’re truly equivalent, why not lower the tier? Why not make it easier to switch? The answer isn’t clinical. It’s financial.
What’s Changing in 2025?
There’s movement. In 2024, the Centers for Medicare & Medicaid Services (CMS) started requiring insurers to report how they cover biosimilars. The results? 78% of plans now include at least one biosimilar alongside the original drug. That’s up from 50% in 2023. And in 2025, Express Scripts has gone all-in: Humira is banned from all its commercial plans. Only biosimilars are covered-and they’re placed on preferred specialty tiers with lower coinsurance (25% instead of 33%). That’s a rare example of a plan actually steering patients toward cheaper alternatives.
CMS is now watching tier placement more closely. Under the Inflation Reduction Act, they’re required to ensure that biosimilars aren’t unfairly restricted. If insurers keep putting biosimilars on the same tier as the original with no financial incentive to switch, they could face penalties. That’s a big deal. It could force PBMs to change their tactics.
The market is growing, too. In 2022, biosimilars made up 12% of the biologics market. By 2024, that jumped to 18%. Experts predict it could hit 40% by 2027-if insurers stop treating them like second-class drugs.
What Patients and Providers Can Do
If you’re on a biologic and your insurance won’t cover the biosimilar your doctor recommends:
- Ask your doctor to write a letter of medical necessity explaining why the biosimilar won’t work for you-or why you’ve already tried something similar.
- Check your plan’s formulary online. Look for the exact name of the biosimilar (e.g., adalimumab-adbm, not just "Humira biosimilar").
- Call your insurer. Ask: "Is this biosimilar on a lower tier? Can I get a prior authorization exception?" If they say no, ask for a formal appeal process.
- If you’re on Medicare, use the Medicare Plan Finder tool to compare formularies during open enrollment. Some plans cover more biosimilars than others.
- Reach out to patient advocacy groups like the Alliance for Patient Access. They help with appeals and track insurer patterns.
Providers, too, need to push back. Document every denial. Track how many patients are delayed. Report formulary issues to your state medical society. The more data we collect, the harder it is for insurers to ignore the problem.
The Bigger Picture
The U.S. spends more on biologics than any other country. Biosimilars could save the system $54 billion over the next decade. But that only happens if patients can actually access them. Right now, the system is built to protect the profits of the original drugmakers and the PBMs that negotiate with them-not to help patients get affordable care.
It’s not about whether biosimilars work. They do. It’s about whether the system lets them. And until insurers stop treating them like a last resort-and start treating them like the better, cheaper option they are-millions of patients will keep paying too much, waiting too long, and getting sicker because of red tape.
Are biosimilars the same as generics?
No. Generics are exact chemical copies of small-molecule drugs like aspirin or metformin. Biosimilars are complex proteins made from living cells that are highly similar-but not identical-to their reference biologic drugs. They require more testing to prove safety and effectiveness, and they can’t be automatically substituted like generics without a doctor’s approval.
Why don’t insurance plans put biosimilars on lower tiers?
Most plans don’t because they receive large rebates from the makers of original biologics. These rebates are built into their profits, so switching to biosimilars-which offer little to no rebate-costs them money. Even though biosimilars are cheaper to produce, insurers often keep them on the same high-cost tier to maintain those financial deals.
Can pharmacists substitute a biosimilar for Humira without my doctor’s permission?
Only if the biosimilar has been designated as "interchangeable" by the FDA. As of 2025, only a few adalimumab biosimilars have this status-and even then, only for low-concentration versions. Most biosimilars still require a doctor’s prescription to be dispensed. Plus, many insurers don’t allow substitution anyway, regardless of FDA designation.
How long does prior authorization for a biosimilar take?
Typically 3 to 14 business days. Your doctor must submit medical records showing you’ve tried other treatments, explain why the original biologic is necessary, and sometimes provide lab results. Delays are common, especially if the insurer requests additional documentation or if your provider’s office is overwhelmed with requests.
What’s the average out-of-pocket cost for a biosimilar vs. Humira?
If both are on the same tier, the difference is small. Humira might cost $4,800 per month, and a biosimilar $4,100. At 33% coinsurance, you’d pay $1,584 for Humira and $1,353 for the biosimilar-a $231 monthly difference. That’s not enough to motivate most patients to switch, especially when the process is identical and the clinical benefit is nearly the same.
Are there any insurance plans that actually encourage biosimilar use?
Yes. Express Scripts, for example, excluded Humira from all its 2025 commercial formularies and placed multiple biosimilars on preferred specialty tiers with 25% coinsurance instead of the standard 33%. This is rare but growing. CMS is now monitoring tier placement more closely, which could push more insurers to follow suit.
Why are biosimilar adoption rates so low in the U.S. compared to Europe?
In Europe, governments and insurers actively push biosimilars by placing them on lower tiers, allowing automatic substitution, and reducing administrative barriers. In the U.S., rebate systems, prior authorization rules, and formulary restrictions slow adoption. As a result, biosimilars make up only about 23% of the adalimumab market in the U.S., compared to over 80% in Europe.
Can I appeal if my insurance denies coverage for a biosimilar my doctor recommends?
Yes. Every insurer has an appeals process. Start by asking your doctor to write a letter of medical necessity explaining why the biosimilar is appropriate. Submit it with your appeal. If denied, you can request an external review. Patient advocacy groups can help guide you through this process.
What Comes Next?
The system is changing-but slowly. More insurers are beginning to exclude originator biologics and push biosimilars. More regulators are watching. More patients are speaking up. But until the financial incentives shift, and until insurers stop using prior authorization and tier placement as tools to protect profits instead of patient access, the promise of biosimilars will remain unfulfilled.
The goal isn’t to replace Humira with a cheaper version. It’s to make sure patients get the right treatment, at the right price, without jumping through hoops. That’s not too much to ask.