Insurance Coverage of Biosimilars: Prior Authorization and Tier Placement Strategies

Why Your Insurance Might Not Cover the Cheaper Biosimilar

You’re prescribed a biologic drug like Humira for rheumatoid arthritis. Your doctor says there’s a biosimilar version-same effectiveness, lower cost. But when you go to fill the prescription, your pharmacy says it’s not covered unless you go through prior authorization. And even then, you’ll pay nearly the same out-of-pocket as you would for the brand-name drug. What’s going on?

Biosimilars are FDA-approved copies of complex biologic drugs, made from living cells. They’re not generics. Generics are chemically identical copies of simple pills. Biosimilars are like a very close twin-same function, same safety, but harder to make. The first one, Zarxio, got FDA approval in 2015. Since then, over 70 have been approved, and about 40 are actually on the market as of 2025.

These drugs were supposed to cut costs. Humira, for example, costs around $5,000 a month. Biosimilars cost 10% to 33% less. The Congressional Budget Office estimates they could save the U.S. healthcare system $54 billion over the next decade. But here’s the problem: insurance coverage rules are still blocking the savings.

How Insurance Tiers Work-and Why Biosimilars Get Stuck

Most insurance plans use a tier system for drugs. Tier 1 is cheap generics. Tier 2 is brand-name pills. Tier 3 and 4 are specialty drugs-like biologics. That’s where Humira and its biosimilars live. You don’t pay a flat copay. You pay a percentage of the drug’s price-usually 25% to 33%.

Here’s the twist: 99% of Medicare Part D plans put biosimilars and the original biologic on the same tier. That means if Humira costs $5,000 and the biosimilar costs $4,200, your 30% coinsurance is $1,500 versus $1,260. A $240 difference. Not enough to make most patients switch.

And only 1.5% of plans put biosimilars on a lower tier-meaning lower cost-sharing. That’s not a mistake. It’s policy. Pharmacy Benefit Managers (PBMs)-the middlemen between insurers and pharmacies-control formulary decisions. They’ve been slow to give biosimilars a financial advantage.

Even worse, some insurers don’t cover biosimilars at all. In 2023, less than 10% of Medicare Part D plans covered insulin biosimilars, even though eight adalimumab biosimilars were already approved. UnitedHealthcare, CVS, Cigna, and Centene didn’t cover any insulin biosimilars at the time.

Prior Authorization: The Bureaucratic Roadblock

Before you can get even the most basic biosimilar, you’ll likely need prior authorization. That’s when your doctor has to submit paperwork proving you’ve tried other treatments first, that your condition is severe enough, and why you need this specific drug.

Here’s the catch: 98.5% of plans that cover Humira require prior authorization for the biosimilar too. Not less. Not easier. The same paperwork. The same wait-3 to 14 business days.

Some plans even require step therapy: you have to try the biosimilar first, even if your doctor says it’s not right for you. One rheumatoid arthritis patient waited 28 days because her plan forced her to try a biosimilar before approving Humira. By then, her joints were worse. She missed work. She needed emergency care.

Rheumatologists report spending 3 to 5 hours a week just filling out prior auth forms. That’s time they could spend treating patients. And it’s not just rheumatology. Dermatologists, gastroenterologists, oncologists-they’re all drowning in paperwork.

Why PBMs Are Changing Their Approach (Slowly)

Not all insurers are holding back. Some are starting to push harder for biosimilars-but not because they care about patients. They care about money.

Express Scripts, OptumRx, and CVS Caremark now exclude Humira from their standard commercial formularies. That means if you want Humira, you have to appeal. You have to prove you’ve failed every biosimilar. You’re not even allowed to ask for it unless your doctor jumps through extra hoops.

In 2025, Express Scripts placed multiple biosimilars on Tier 3-preferred specialty tier-with 25% coinsurance. Humira? Not on the list. It’s gone. This isn’t about fairness. It’s about steering patients toward cheaper options by removing the expensive one entirely.

That’s a big shift. Instead of just putting biosimilars on the same tier, they’re removing the original. It’s a tactic called “formulary exclusion.” And it’s working. In Europe, biosimilars make up over 80% of the market. In the U.S., it’s still only 23% for adalimumab drugs-even though eight biosimilars are available.

The Real Cost to Patients

Patients aren’t saving much. When biosimilars and originals are on the same tier, the out-of-pocket difference is tiny. Medicare Rights Center data shows patients pay an average of $1,200 a month for Humira and $1,150 for biosimilars. That’s $50 less. For someone on a fixed income, that’s not enough to risk switching. What if the biosimilar doesn’t work as well? What if they get side effects? What if their insurance denies it again next month?

And it’s not just money. It’s stress. One patient told her doctor: “I’m scared to switch. Last time I tried a new drug, my insurance made me wait two months. My pain got worse. I almost lost my job.”

Doctors can’t force insurers to cover what they want. They can only recommend. And if the formulary doesn’t support the biosimilar, the patient loses.

What’s Changing in 2025-and What’s Not

The government is paying attention. In late 2024, the Office of Inspector General (OIG) found that most Medicare Part D plans were not encouraging biosimilar use. They called it a missed opportunity. CMS responded by expanding its monitoring of formularies to include tier placement and prior authorization rules.

The Inflation Reduction Act gives CMS new power to penalize plans that unfairly restrict biosimilars. But enforcement is still weak. PBMs argue that placing biosimilars on the same tier is “clinically appropriate.” They say the drugs are equivalent, so why give one a discount?

But that’s not how competition works. If you have two identical products, one cheaper, you give the cheaper one a better deal. That’s how markets function. Insurance plans aren’t markets. They’re gatekeepers. And right now, they’re protecting profits over savings.

Still, change is coming. Industry analysts predict biosimilar market share will hit 40% by 2027. That’s still far behind Europe. But it’s progress. The key will be whether CMS enforces fair tiering and removes prior authorization barriers.

What You Can Do

If you’re on a biologic and your doctor suggests a biosimilar:

1. Ask your doctor to check your plan’s formulary. Not all biosimilars are covered the same way.
2. Request a formulary exception if the biosimilar isn’t listed or is on a higher tier.
3. Ask if your plan offers a step therapy override-some plans allow it if you’ve tried and failed other treatments.
4. Call your insurer directly. Ask: “Is the biosimilar on the same tier as the brand? If so, can you put it on a lower tier?”
5. Document everything. If your claim is denied, save the denial letter. You may need it to appeal.

And if you’re a provider: push back. Submit appeals. Report formulary barriers to patient advocacy groups. The system won’t fix itself.

Where This Is Headed

Biosimilars are here to stay. They’re safe. They’re effective. They’re cheaper. The FDA, the FTC, and even Congress agree: they should be widely used.

But until insurers stop treating them like second-class drugs-until they stop putting them on the same tier, require the same prior auth, and ignore the cost difference-patients will keep paying more than they should.

The savings are real. The technology is ready. The only thing holding us back is how insurance companies choose to cover-or not cover-these drugs.