Biosimilars in Part D: Lower-Cost Alternatives Explained

You've probably heard your pharmacist say "we switched you to the generic." For biologic drugs — the complex, injectable medications used for rheumatoid arthritis, psoriasis, Crohn's disease, cancer, and more — there is no simple generic. Instead, there is a biosimilar: a drug the FDA has determined is highly similar to the original biologic, with no clinically meaningful differences in safety or effectiveness. If you're paying specialty-tier prices for a biologic, the biosimilar version could be your cheapest option — but Medicare Part D plans handle them inconsistently, so it pays to understand the rules.

What exactly is a biosimilar?

Biologics are made from living cells, so no company can make an exact chemical copy the way generic makers copy simple pills. A biosimilar is the closest possible equivalent: same active mechanism, same dose and strength, same effectiveness, same safety profile. Think of it like two loaves of bread from the same recipe baked in different kitchens — not identical molecule-for-molecule, but delivering the same result.

Some biosimilars carry an extra FDA label: interchangeable. An interchangeable biosimilar has passed additional testing proving it can be swapped for the original biologic without loss of effectiveness — meaning a pharmacist may substitute it automatically, depending on your state and your plan's rules. Regular biosimilars, in contrast, require your prescriber to write the prescription for the biosimilar by name.

Why biosimilars matter for your Part D costs

Biologics are among the most expensive drugs in Part D. When a biosimilar enters the market, the competition typically pushes prices down — sometimes dramatically. In 2026, Medicare Part D caps your annual out-of-pocket spending on covered drugs at $2,100 (after which you pay $0 for covered drugs), and the Medicare Prescription Payment Plan lets you spread your share across monthly payments. A lower-priced biosimilar helps you in two ways:

• Less cost before you reach the cap. Since plans usually charge a coinsurance percentage (often 25–33%) on specialty-tier drugs, a cheaper list price means smaller monthly bills on your way to the $2,100 cap.
• Lower plan premiums over time. Biosimilar competition can reduce what plans pay, which feeds into premiums for everyone.

The savings are real but uneven — and that's where the coverage details matter.

Your plan's formulary decides — and it may surprise you

Here is the frustrating part: your Part D plan decides whether the biosimilar, the original biologic, or both are on its formulary, and at what tier. Because plans negotiate their own deals with manufacturers, three scenarios all happen in practice:

1. The biosimilar is on a cheaper tier than the original. This is the best case — same clinical effect, lower copay or coinsurance.
2. Both are covered at the same tier. You save little or nothing on paper, though the plan's lower acquisition cost can hold premiums down.
3. The original biologic is preferred and the biosimilar isn't covered. Plans sometimes keep the higher-priced original on the formulary because the negotiated rebates make it more profitable for the plan. In that case you may need a formulary exception to get the biosimilar covered.

Also watch for step therapy: some plans now require you to try the biosimilar before they'll approve the original biologic. If you were stable on the original for years, ask your doctor whether a medical-exception request is appropriate.

How to switch to a biosimilar

Switching isn't automatic in most cases. Here's a practical checklist:

• Check the formulary first. Use Medicare's Plan Finder or your plan's formulary lookup to see which version — original or biosimilar — your plan covers and at what tier.
• Ask your doctor to prescribe the biosimilar by name. Unless the product is labeled interchangeable and your state allows pharmacy substitution, the prescription must name the biosimilar.
• Expect a new prior authorization. Even though the drugs are clinically equivalent, switching products typically triggers a fresh prior authorization. Start this before you run out of your current supply.
• Confirm the pharmacy. Some specialty pharmacies are set up for one product but not the other; confirm your pharmacy can dispense and ship the biosimilar.
• Track your out-of-pocket progress. Your $2,100 cap and Payment Plan math follow the same rules regardless of which version you take, but a lower price changes how quickly you reach the cap.

One timing tip: if you take a biologic affected by Medicare's negotiated prices — the first negotiated prices took effect in 2026 — ask your plan how those prices interact with the biosimilar's tier placement. The landscape is still shifting.

Bottom line: Biosimilars give Part D enrollees a real path to lower prices on the priciest drugs in the medicine cabinet, but your plan's formulary — not the FDA label — decides what you actually pay, so check coverage and get a fresh prescription before assuming the switch is automatic.