BILL ANALYSIS �
SB 598
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Date of Hearing: August 21, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 598 (Hill) - As Amended: August 6, 2013
Policy Committee: HealthVote:14-2
Business and Professions Vote: 12-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill specifies conditions under which pharmacists can
substitute "biosimilar" products for prescribed biologic
products (biologics). Specifically, this bill:
1)Requires the product selected as a biosimilar to have been
approved as interchangeable with the prescribed biologic by
the federal Food and Drug Administration (FDA), via a
specified licensure pathway.
2)Applies certain provisions that currently apply to generic
drug substitution to substitution of biosimilars, including
provisions related to patient notification, patient cost,
pharmacist liability, application of rules to prescriptions
covered by Medi-Cal, and disallowance of substitution in cases
where a prescriber has indicated "do not substitute."
3)Until January 1, 2017, with some exceptions, requires
pharmacies to notify prescribers specifying the biological
product or interchangeable biosimilar that was dispensed.
4)Requires the Board of Pharmacy to maintain a link to the
current list, if available, of biosimilar products determined
by FDA to be interchangeable.
FISCAL EFFECT
Contingent on future federal Food and Drug Administration (FDA)
approval of biosimilars, biosimilar substitution could result in
significant future savings in state health programs (primarily
Medi-Cal, CalPERS, and correctional health). Like generic
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versions of brand-name drugs, biosimilars are likely to be lower
in cost than the prescribed biologics. Given that the FDA's
approval process has not been finalized and no biosimilars are
available, it is difficult to precisely estimate when and to
what extent potential savings from biosimilar substitutions will
accrue. Actual savings will depend on the biosimilar
penetration rate and the cost difference between biosimilars and
reference products. However, given plausible estimates of these
variables, it is reasonable to assume cost savings to the state
could eventually be in the tens of millions of dollars annually.
COMMENTS
1)Rationale . This bill seeks to establish conditions under
which biosimilar substitution can take place. It appears a
law change is necessary to allow pharmacies to substitute
biosimilars deemed interchangeable with prescribed biologic
products. In addition, supporters assert that uncertainty
about whether biosimilars are truly interchangeable with
prescribed biologics will be of sufficient magnitude, once
biosimilars are approved, as to warrant notification to
prescribers about whether the prescription was filled with the
prescribed biologic or an interchangeable biosimilar.
2)Biologics and Biosimilars . According to the FDA, biological
products (biologics) can include a wide range of products
including vaccines, blood and blood components, gene therapy,
tissues, and proteins. Federal law defines "biosimilar" as a
biological product that is highly similar to a U.S.-licensed
reference biological product notwithstanding minor differences
in clinically inactive components, and for which 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.
Unlike most prescription drugs, biologics are generally made
from living materials and have complex molecular structures.
Whereas generic versions of prescription drugs can be verified
as chemically "bioequivalent" to brand-name drugs, the complex
structure of biologics makes it more challenging to identify
generic versions. Additionally, until recently, FDA did not
have the authority to license biosimilars based on a
comparison to a reference product already approved as safe and
effective. In order to encourage price competition and
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innovation in the biologics industry, federal legislation in
2010 created an abbreviated licensure pathway for
biosimilars-much like the abbreviated pathway for generic drug
development. It is expected that developers of biosimilars
will not have to conduct the same number and scope of clinical
trials that are required for a reference biologic product.
To date, no biosimilars have been approved and it is not yet
known when the first biosimilar will be on the U.S. market.
The FDA has yet to finalize the biosimilar licensure pathway,
which it states is a "complicated and challenging process."
3)Interchangeability . Federal law also establishes a higher
standard of "interchangeable biosimilar"-a drug that is both
biosimilar and can be expected to produce the same clinical
result as the reference product in any given patient, among
other safeguards. Interchangeable biosimilars will have to
meet more rigorous standards than other biosimilars. Federal
law provides that, once approved, an interchangeable
biosimilar may be substituted for the reference product
without the intervention of the health care provider who
prescribed the reference product. Consistent with federal
law, this bill allows substitution only for biosimilars deemed
interchangeable.
4)Cost Savings . Reports cited by the Government Accountability
Office as part of a comprehensive review of the costs savings
attributable to generic drugs found that generic substitution
has saved the U.S. health care system more than $1 trillion in
the 12-year period 1999 through 2010. Various sources
estimate biosimilars will be priced at a 20% to 50% discount
from the price of reference products.
5)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.
6)Opposition . Health plans, certain biotechnology companies,
pharmacies, and the state Board of Pharmacy all oppose this
bill. They indicate it is premature to establish a state
regulatory regime for biosimilars at this time, given FDA has
not yet established the standards biosimilars need to meet.
In addition, biotechnology companies interested in biosimilar
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development see the physician notification requirement of the
bill as an attempt to erect arbitrary barriers to adoption of
biosimilar substitution. These opponents note that legislation
with the intent of raising doubts about the safety and
efficacy of biosimilars has also been introduced in 18 other
states. They contend these bills attempt to impede
substitution of interchangeable biosimilars by erecting
various barriers, including physician notification, patient
consent, and additional record-keeping that serves no purpose.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081