BILL ANALYSIS �
SB 598
Page 1
Date of Hearing: July 2, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 598 (Hill) - As Amended: June 20, 2013
SENATE VOTE : 29-4
SUBJECT : Biosimilars.
SUMMARY : Authorizes a pharmacist filling a prescription order
for a prescribed biological product to substitute a biosimilar
only if certain conditions are met, including notifying the
prescriber within five business days of the selection.
Specifically, this bill :
1)Authorizes a pharmacist filling a prescription order for a
prescribed biological product to select a biosimilar only if
all of the following conditions are met:
a) The product selected as a biosimilar has been approved
by the federal Food and Drug Administration (FDA), as
specified, and has been determined by the FDA as
interchangeable with the prescribed biological product, as
specified;
b) The prescriber does not personally indicate, either
orally or in handwriting, "Do not substitute" or words of
similar meaning; and,
c) For prescriptions filled prior to January 1, 2017, the
pharmacy notifies the prescriber or enters the appropriate
information in a patient record system shared by the
prescriber within five business days of the selection.
2)Prohibits a selection pursuant to 1) above if the prescriber
personally indicates, either orally or in handwriting, "Do not
substitute" or words of similar meaning. Provides that this
bill does not prohibit a prescriber from checking a box on a
prescription marked "Do not substitute," provided that the
prescriber personally initials the box or checkmark.
Authorizes, for an electronic data transmission prescription,
a prescriber to indicate "Do not substitute" or words of
similar meaning, in the prescription as transmitted by
electronic data, or to check a box marked on the prescription
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"Do not substitute." Prohibits a requirement that the
substitution be manually initialed by the prescriber.
3)Indicates that selection pursuant to 1) above is within the
discretion of the pharmacist, except as provided in 2) above.
Requires the pharmacist, who selects a biosimilar to be
dispensed, to assume the same responsibility for substituting
the biosimilar as would be incurred in filling a prescription
for a biosimilar prescribed by name. Indicates that there is
no liability on the prescriber for an act or omission by a
pharmacist in selecting, preparing, or dispensing a biological
product under this bill.
4)Prohibits a pharmacist from substituting a biological product
unless the biological product selected costs the patient the
same or less than the prescribed biological product. Defines
cost to include any professional fee that may be charged by
the pharmacist.
5)Applies this bill to all prescriptions, including those
presented by or on behalf of persons receiving assistance from
the federal government or Medi-Cal, as specified.
6)Requires the substitution of a biosimilar to be communicated
to the patient when a selection is made.
7)Requires the Board of Pharmacy (Board) to maintain on its
public Internet Website a link to the current list, if
available, of biosimilar products determined by the FDA to be
interchangeable, as specified.
8)Defines the following terms:
a) Biological product, biosimilar, and interchangeable have
the same meanings that apply to those terms under Section
351 of the federal Public Health Service (PHS) Act;
b) Prescription with respect to a biological product means
a product that is subject to the federal Food, Drug, and
Cosmetic Act;
c) The 351 (k) pathway refers to the licensure of a
biological product as a biosimilar or an interchangeable
biosimilar by the FDA, as specified.
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9)Provides that nothing in this bill prohibits the
administration of immunizations, as specified.
10)Provides that nothing in this bill is to be interpreted to
prohibit a disability insurer or health care service plan from
requiring prior authorization or imposing other appropriate
utilization controls in approving coverage for any biological
product.
EXISTING LAW :
1)Provides for the practice of pharmacy and the licensing and
regulation of pharmacies and pharmacists by the Board within
the Department of Consumer Affairs.
2)Specifies certain requirements regarding the dispensing and
furnishing of dangerous drugs and devices and prohibits a
person from furnishing any dangerous drug or device except as
prescribed by a physician, dentist, podiatrist, optometrist,
or veterinarian.
3)Establishes requirements for generic drug substitution.
Authorizes a pharmacist filling a prescription order for a
drug product prescribed for its trade or brand name to select
another drug product with the same active chemical ingredients
of the same strength, quantity, and dosage form, and of the
same generic drug name as determined by the United States
Adopted Names and accepted by the FDA of those drug products
having the same active chemical ingredients.
4)Prohibits a selection pursuant to 3) above if the prescriber
personally indicates, either orally or in handwriting "Do not
substitute" or words of similar meaning.
5)Provides that the selection pursuant to 3) above is within the
discretion of the pharmacist, except as provided in 4) above.
Prohibits a pharmacist from selecting a drug pursuant to 3)
above unless the drug product selected costs the patient less
than the prescribed drug product.
6)Authorizes a pharmacist filling a prescription order for a
drug product to select a different form of medication with the
same active chemical ingredients of equivalent strength and
duration of therapy as the prescribed drug when the change
will improve the ability of the patient to comply with the
prescribed drug therapy.
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7)Makes it unprofessional conduct under the California Medical
Practice Act for a physician and surgeon to fail to maintain
adequate and accurate records relating to the provision of
services to their patients.
8)Establishes the federal FDA, among other functions, to
regulate drugs, vaccines, medical devices, biological
products, cosmetics, and tobacco products.
9)Enacts the federal PHS Act which, among other provisions,
establishes strict standards of safety, purity, and potency of
biological products.
10)Enacts the federal Drug Price Competition and Patent Term
Restoration Act, also known as the Hatch-Waxman Act, among
many provisions, to establish a process for the approval of
generic drugs.
11)Establishes by January 1, 2014, under the federal Patient
Protection and Affordable Care Act (ACA), health benefit
insurance exchanges in each state for individuals and small
businesses to purchase health insurance products. Grants
authority to states to operate an exchange and prohibits
insurers participating in the exchange from discriminating
based on pre-existing conditions, health status, and gender.
12)Defines a biological product as a virus, therapeutic serum,
toxin, antitoxin, vaccine, blood, blood component or
derivative, allergenic product, protein (except any chemically
synthesized polypeptide), or analogous product, or
arsphenamine or derivative of arsphenamine (or any other
trivalent organic arsenic compound), applicable to the
prevention, treatment, or cure of a disease or condition of
human beings.
13)Defines biosimilar or biosimilarity in reference to a
biological product as a biological product that is highly
similar to the reference product (already licensed biological
product) notwithstanding minor differences in clinically
inactive components; and there are no clinically meaningful
differences between the biological product and the reference
product in terms of the safety, purity, and potency of the
product.
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14)Defines interchangeable or interchangeability to mean that
the biological product may be substituted for the reference
product without the intervention of the health care provider
who prescribed the reference product.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
allows less expensive biosimilar medicines to be automatically
substituted by pharmacists for brand name biologics as this
would save consumers money. As part of federal health care
reform, the Biologics Price Competition and Innovation Act of
2009 (BPCI Act) was enacted to allow biosimilars to be
approved by the FDA for use in the United States. In order to
reflect the emerging technology of biosimilars and allow for
them to be substituted for a biologic, California must update
its Pharmacy Practice Act. The Business and Professions Code
does not define biosimilars and existing generic pill
definitions do not apply. This bill mirrors California's
patient protections for generic pill substitution and adds a
provision that requires a pharmacist to enter information
about the substitution into the patient record system or
notify the physician within five days after a substitution is
made.
2)BACKGROUND .
a) Biologics and Biosimilars . According to the FDA,
biological products or biologics replicate natural
substances such as enzymes, antibodies, or hormones in
people's bodies.
Biological products can be composed of sugars, proteins, or
nucleic acids or a combination of these substances. In
contrast to chemically synthesized small molecular weight
drugs which have a well-defined structure and can be
thoroughly characterized, biological products are generally
derived from living material (human, animal, or
microorganism), and are complex in structure and thus are
usually not fully characterized.
Section 351 of the PHS Act defines a biological product as a
"virus, therapeutic serum, toxin, antitoxin, vaccine,
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blood, blood component or derivative, allergenic product,
or analogous product . . . applicable to the prevention,
treatment, or cure of a disease or condition of human
beings." Currently, the FDA's Center for Biologics
Evaluation and Research regulates a wide range of
biological products, including: allergenic extracts; blood
and blood components; gene therapy products; devices and
test kits; human tissue and cellular products used in
transplantation; and vaccines. The Center for Drug
Evaluation and Research within FDA regulates other
categories of biological products mostly produced by
biotechnology methods, including: monoclonal antibodies
designed as targeted therapies in cancer and other
diseases; cytokines (types of proteins involved in immune
response); growth factors (proteins that affect the growth
of a cell); enzymes (types of proteins that speed up
biochemical reactions, such as thrombolytic drugs which are
used to dissolve blood clots); and, immunomodulators
(agents that affect immune response).
According to the European Medicines Authority (EMA), FDA's
counterpart in the European Union (EU), the active
substance of a biosimilar and its reference product is
essentially the same biological substance, though there may
be minor differences due to their complex nature and
production methods. Like the reference product, the
biosimilar has a degree of natural variability. When
approved, the biosimilar's variability and any differences
between it and the reference product will have been shown
not to affect safety or effectiveness. An approved
biosimilar is generally used at the same dose to treat the
same conditions. If there are specific precautions to be
considered when taking the reference product, the same will
generally apply to the biosimilar. Biosimilars are usually
approved several years after the approval of the reference
product so that the reference product benefits from a
period of exclusivity, during which time biosimilars cannot
be approved. The EU established a pathway for approving
biosimilar medicines in 2003, and biosimilars began to
enter the EU's markets in 2007. The EMA also grants the
reference product's manufacturers up to 11 years of market
and data exclusivity which means that during those years no
biosimilar manufacturer may submit an application relying
on the reference product's data.
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b) The ACA and Biosimilars . The ACA, signed into law by
President Obama on March 23, 2010, amended the PHS Act and
created an abbreviated licensure pathway for biological
products that are demonstrated to be "biosimilar" to or
"interchangeable" with an FDA-licensed biological product.
This pathway is provided under the BPCI Act. The other
provisions of the BPCI Act include application
requirements, patent provisions, and exclusivity
requirements where the original biologic is granted 12
years of exclusivity.
c) Safety Standards for Determining Interchangeability .
The provisions of this bill apply to biosimilars that are
determined to be interchangeable with the reference
product. Under the BPCI Act, to meet the higher standard
of interchangeability, it must be demonstrated that the
biosimilar product can be expected to produce the same
clinical result as the reference product in any given
patient and, for a biological product that is administered
more than once, that the risk of alternating or switching
between use of the biosimilar product and the reference
product is not greater than the risk of maintaining the
patient on the reference product.
The BPCI Act provides that an interchangeable " may be
substituted for the reference product without the
intervention of the health care provider who prescribed the
reference product ."
d) Healthcare Costs and Biologic Products . According to a
2006 Health Affairs Article entitled "Prices and
Availability of Biopharmaceuticals: An International
Comparison," the total biologic sales in the US in 2005
amounted to over $34 billion. A 2011 article on the
Biotechnology Healthcare Magazine entitled "The Business of
Biologics" indicates that the demand for biologics in the
U.S is expected to grow 6.5% per year to $102 billion in
2015. Respondents of a 2010 online survey of more than 150
healthcare executives (The Biologic Finance and Access
Council 2nd Annual Biologics Healthcare Survey: Views from
Key Healthcare Stakeholders), state that biosimilars will
be available at approximately 40% discount from branded
biologic drug products.
In Europe, there is a growing market for biosimilars. A 2011
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report prepared for the European Commission entitled "The
Impact of Biosimilars' Entry in the EU Market" indicates
the following: "A quantitative analysis of the biosimilar
market in the EU Member States estimates the growth of
biosimilars' market value: from 33 million Euros in 2007 to
65 million Euros in 2009. The market penetration of
biosimilars rose on average from 0.34% to 6.64% in the same
period. The price of biosimilars is on average between 10%
and 35% lower than the respective reference products. These
figures have to be taken with caution, because they are
based on list prices, which do not take into account the
discounts and rebates often accorded by suppliers,
especially to hospitals and other institutional buyers. An
estimate of the market value of existing original biologic
products which will lose patent protection in upcoming
years, suggests that by 2019 approximately 50% of the
market will correspond to offpatent medicines, thus
suggesting a high market potential for biosimilars."
e) Other States . According to the opponents, legislation
restricting pharmacists' ability to substitute
interchangeable biosimilars was introduced in Arizona,
Arkansas, Colorado, Illinois, Indiana, Maryland,
Mississippi, Texas, and Washington but all eventually died.
Virginia, Utah, Oregon, Florida, and North Dakota have
enacted laws specifying the circumstances under which
pharmacists could substitute biosimilars for biologics.
Oregon, Utah, and Virginia included a physician
notification requirement and sunset date on their
legislation.
f) Health Care Savings and Generic Drugs . According to a
letter sent by the U.S. Government Accountability Office
(GAO) to U.S. Senator Orrin Hatch, prescription drug
spending in the U.S. reached $307 billion in 2010, an
increase of $135 billion since 2001 and comprised
approximately 12% of all health care spending in the
country. Until the early 2000s, drug spending was one of
the fastest growing components of health care spending.
However, since that time, the rate of increase has
generally declined each year, attributable in part to the
greater use of generic drugs. On average, the retail price
of a generic drug is 75% lower than the retail price of a
brand-name drug.
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GAO reviewed and identified articles that used varying
approaches to estimate the savings associated with generic
drug use in the U.S. and concluded that various studies
provide mixed results regarding the use of generics, as
follows:
i) A series of studies estimated the total savings from
substituting generic drugs for their brand-name
counterparts, found that from 1999-2010 substitution
saved more than $1 trillion;
ii) A second group of studies estimated the potential to
save more on drugs through greater use of generics. For
example, one study assessed the potential for additional
savings within the Medicare Part D program-which provides
outpatient prescription drug coverage for Medicare-and
found that if generic drugs had always been substituted
for the brand-name drugs studied, about $900 million
would have been saved by the Medicare Part D program in
2007.
iii) A third group of studies estimated the effect on
health care costs of using generic versions of certain
types of drugs where questions had generally been raised
about whether substituting generic drugs for brand-name
drugs was medically appropriate. Unlike the other two
groups which focused on savings on drugs only, these
studies compared savings from the lower cost of generic
drugs to other health care costs that could accrue from
their use, such as increased hospitalizations.
3)SUPPORT . Amgen states that this bill allows for greater
patient access to life-saving, less costly FDA-approved
biosimilar medicines and allows pharmacists to substitute.
Requiring physician notification is necessary because of the
complexity of the entire class of biologics and the need for
full and complete patient records in the event that the
physician needs to report an adverse event. A complete
patient record gives a physician the information needed to see
patterns of immune response among patients and the ability to
recognize the potential need for follow-up.
The State Building and Construction Trades Council of
California, Western States Council of Sheet Metal Workers, and
International Union of Operating Engineers state that this
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bill would allow for greater patient access to life-saving,
less costly FDA-approved biosimilar medicines. Actavis,
BayBio, and BIOCOM write that this bill enhances physician and
patient partnership by establishing a mechanism for notifying
physicians about which specific biosimilar product is used in
patient treatment. The American Autoimmune Disease
Association indicates that this bill fulfills the
responsibility given to states by the ACA to develop standards
by which biosimilars can be substituted for brand-name
biologics.
4)OPPOSE UNLESS AMENDED . Blue Shield of California (BSC)
indicates that this bill contains a provision that only allows
for substitution if the biosimilar product costs the patient
less. This provision would be a de facto ban on biosimilar
substitution because of new cost sharing limitations imposed
by the ACA. Because of the extremely high cost of biologics
and their biosimilars, a consumer is very likely to exceed
their ACA-required maximum out-of-pocket limits, resulting in
no cost differential to the consumer. In this case, a member
would not realize a lower cost from a biosimilar and therefore
a substitution could not occur. BSC is proposing to instead
allow the substitution so long as the biosimilar does not cost
the member more money. This amendment ensures that the goal
of this bill is not technically disallowed due to the new ACA
limitations. Additionally, BSC writes that this bill does not
affect a plan's ability to establish a formulary or
utilization drug management practices. BSC indicates that the
physician notification provisions should be stricken because
it conflicts with the federal BPCI Act.
5)OPPOSITION . The Board indicates that this bill is premature
because no biosimilars have yet been approved by the FDA and
suggests that once the FDA approves the substitution of
biosimilar products then it would be appropriate to make
changes to California law. The Board also notes that once a
product is deemed biosimilar, it would support the existing
approach for substituting generic drugs, whereby the
pharmacist can substitute a biosimilars without prescriber
approval, unless the prescriber indicates "do not substitute."
AARP states that this bill has the potential to negatively
impact access to prescription medication, and may lead to
affordability issues that prevent consumers from obtaining
important medications.
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Teva Pharmaceuticals, Boehringer Ingelheim, Express Scripts, and
Novartis believe this bill is premature and that state action
is not necessary. State action, they believe would adversely
affect the availability of biosimilars to patients at
reasonable cost and create doubt about the safety and
effectiveness of affordable biosimilar drugs. The opposition
also states that this bill stifles competition in the
biological drug market which spurs innovation, improve
consumer choice, and drive down medical costs.
6)RELATED LEGISLATION . AB 1139 (Lowenthal) permits a pharmacist
to substitute a biosimilar for a biological product if the
product is deemed by the FDA to be interchangeable with the
biological product. AB 1139 is pending in the Assembly
Business, Professions and Consumer Protection Committee.
7)PREVIOUS LEGISLATION . SB 1504 (Ridley-Thomas) of 2008 would
have prohibited a pharmacist filling a prescription order for
an antiepileptic drug or formulation of an antiepileptic drug,
prescribed by its trade, brand, or generic name for the
treatment or prevention of epileptic seizures, from
substituting a drug product without prior notification of the
prescriber and the signed consent of the patient or the
patient's parent, legal guardian, or spouse. SB 1504 died in
the Senate Business, Professions and Economic Development
Committee.
8)DOUBLE REFERRAL . This bill has been double referred. It
passed the Assembly Committee on Business Professions and
Consumer Protection on a vote of 12-0 on June 25, 2013.
9)TECHNICAL AMENDMENTS . To address technical drafting issues,
the Committee may wish to clarify the references to biosimilar
and biological products, as follows:
(c) Selection pursuant to this section is within the
discretion of the pharmacist, except as provided in
subdivision (b). The pharmacist who selects the
biosimilar to be dispensed pursuant to this section shall
assume the same responsibility for substituting the
biosimilar as would be incurred in filling a prescription
for a biosimilar prescribed by name. There shall be no
liability on the prescriber for an act or omission by a
pharmacist in selecting, preparing, or dispensing a
biological product pursuant to this section. In no case
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shall the pharmacist substitute a biological product
pursuant to this section unless the biological product
selected costs the patient the same or less than the
prescribed biological product . In no case shall the
pharmacist select a biosimilar that meets the requirement
of paragraph (a) (1) unless the biosimilar selected costs
the patient the same or less than the prescribed
biological product. Cost, as used in this subdivision,
is defined to include any professional fee that may be
charged by the pharmacist.
10)POLICY CONSIDERATIONS .
a) Physician Notification . The physician notification
provision in this bill applies where a biological product
is substituted with an interchangeable biosimilar.
However, as the supporters indicate all biological products
are complex molecules which could produce variable patient
sensitivity and immune response, which require close
physician communication and follow-up. To ensure
monitoring and since the notification only applies where
the prescriber has not indicated "Do not substitute," the
Chair recommends amending this bill to instead require the
pharmacy to notify the prescriber specifying the biological
or biosimilar product that was dispensed.
b) Federal Law Pre-emption . This bill requires a pharmacy
to notify the prescriber when a prescription order for a
prescribed biological product is substituted with an
interchangeable biosimilar. However, section 351 of the
PHS Act provides that an interchangeable biosimilar may be
substituted for the reference product without the
intervention of the health care provider who prescribed the
reference product. The prescriber notification provision
of this bill appears to be inconsistent with the federal
BPCI Act.
c) Premature . The FDA is at the early stages of its work
relating to establishing a pathway for the approval of
biosimilars. The FDA has recently issued draft guidelines
relating to the general principles that will be applied
during the approval process and make clear that the
regulatory requirements that biosimilar applicants will be
required to meet will be highly product dependent.
However, while these guidelines provide useful insights
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into the FDA's views on the approval of biosimilar
applications, the full scope of the challenges associated
with obtaining regulatory approval for biosimilars remains
uncertain. As such, since the federal requirements are not
settled, the Committee may wish to consider whether the
provisions of this bill are premature.
REGISTERED SUPPORT / OPPOSITION :
Support
Anna G. Eshoo, Member of Congress
Abbvie, Inc.
AIDS Institute
AIM at Melanoma
Alliance for Patient Access
Alliance for Safe Biologic Medicines
Alliance of Specialty Medicine
American Academy of Facial Plastic & Reconstructive Surgery
American Association of Neurological Surgeons
American Association of People with Disabilities
American Autoimmune Related Diseases Association
American College of Mohs Surgery
American Council on Science and Health
American Gastroenterological Association
American Society of Cataract and Refractive Surgery
American Society of Echocardiography
American Society of Plastic Surgeons
American Urological Association
Amgen
Association of Black Cardiologists
Association of Clinical Research Organizations
Association of Gastrointestinal Motility Disorders, Inc.
BayBio
BIOCOM
Biotechnology Industry Organization
Blue Ribbon Advocacy Alliance
California Healthcare Institute
California Medical Association
Coalition of State Rheumatology Organizations
Colon Cancer Alliance
Colorectal Cancer Coalition
Congress of Neurological Surgeons
CONNECT
Genentech
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Global Healthy Living Foundation
HealthHIV
Interamerican College of Physicians and Surgeons
International Cancer Advocacy Network
International Union of Operating Engineers
Jenny's Quest - Cure for Pediatric Brain Stem Cancer
Kidney Cancer Association
MANA
MedImmune
Merck & Co., Inc.
National Alliance on Mental Illness
National Kidney Foundation
North American Spine Society
Pharmaceutical Research and Manufacturers of America
RetireSafe
Silicon Valley Leadership Group
Society for Cardiovascular Angiography and Interventions
Society for Excellence in Eyecare
State Building and Construction Trades Council
TechNet
UCB, Inc.
Western States Council of Sheet Metal
Opposition
AARP
America's Health Insurance Plans
Anthem Blue Cross
Boehringer Ingelheim
California Association of Health Plans
California Retailers Association
California State Board of Pharmacy
Express Scripts
Generic Pharmaceutical Association
National Association of Chain Drug Stores
Novartis
Teamsters
Teva Pharmaceuticals
Walgreens
Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916)
319-2097
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