BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SJR 29|
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                                   THIRD READING 


          Bill No:  SJR 29
          Author:   Hernandez (D), et al.
          Introduced:8/29/16  
          Vote:     21 

           SUBJECT:   EpiPen:  pricing


          SOURCE:    Author


          DIGEST:  This resolution makes various legislative findings  
          related to the increase in the price of the EpiPen by the  
          pharmaceutical manufacturer Mylan, urges the federal Food and  
          Drug Administration to reconsider its denial of generic  
          alternatives to EpiPen, and urges Congress to investigate the  
          impact that Mylan's monopoly has had on the price hikes for  
          EpiPen and to take action to limit the unrestrained ability of  
          drug manufacturers to increase prices based only on what the  
          market will bear.


          ANALYSIS:  Existing law requires school districts, county  
          offices of education (COE), and charter schools to provide  
          emergency epinephrine auto-injectors (EAIs) to school nurses or  
          trained personnel who have volunteered, as specified.   
          Additionally, it authorizes school nurses or trained personnel  
          to use the EAIs to provide emergency medical aid to persons  
          suffering, or reasonably believed to be suffering, from an  
          anaphylactic reaction.


          This resolution:








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          1)Makes the following legislative findings:


             a)   Millions benefit from life-saving drugs and devices,  
               including Americans with allergies that can be treated by  
               epinephrine;


             b)   Last year, doctors wrote 3.6 million prescriptions for  
               EpiPen, which stops allergic reactions by quickly and  
               safely injecting epinephrine;


             c)   In 2007 Mylan NV purchased the rights to EpiPen and  
               immediately began raising its price. In 2008 and 2009,  
               Mylan raised the price by 5%, and at the end of 2009 it  
               raised the price by another 19%. From 2010 to 2013, Mylan  
               imposed a series of 10% price hikes. And from the fourth  
               quarter of 2013 to the second quarter of 2016, Mylan raised  
               EpiPen prices 15% every other quarter;


             d)   A pack of two EpiPen devices now has a list price of  
               over $600, an increase of 548% since Mylan began selling  
               the drug, according to Truven Health Analytics; 


             e)   The formula of EpiPen did not change, and it is no more  
               effective in protecting against allergic reactions in 2016  
               than it was in 2007;


             f)   During the same time, Mylan began an aggressive  
               marketing and lobbying effort to increase demand for  
               EpiPen, which included the passage of federal and state  
               legislation. The United States Congress passed the School  
               Access to Emergency Epinephrine Act in 2013 to provide an  
               incentive to states to boost the stockpile of epinephrine  
               at schools. A number of states, including California,  
               passed laws requiring public schools to have epinephrine.  
               In 2010, the United States Food and Drug Administration  
               (FDA) changed its recommendations so that two EpiPen  







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               devices be sold in a package instead of one and that they  
               be prescribed for at-risk patients, not just those with  
               confirmed allergies;


             g)   The rising cost of EpiPen has implications for  
               taxpayers. Over half of California's children are insured  
               through Medi-Cal, therefore the taxpayers are paying a  
               large share of the cost of this medication;


             h)   Mylan has an effective monopoly that it is using to  
               maximize profit because there is no equivalent generic  
               competitor; 


             i)   Patients who have to pay retail prices are being forced  
               to buy EpiPen abroad, where it is cheaper, and are  
               resorting to other devices that deliver epinephrine,  
               including do-it-yourself syringes;


             j)   Even some ambulance providers in California have stopped  
               the use of EpiPen to treat allergic shock and instead are  
               drawing from a vial and injecting epinephrine by syringe.  
               First responders in Seattle have developed such a kit and  
               have sold them to public health agencies in five other  
               states. There is a demonstration project in New York called  
               "Check and Inject New York" that trains first responders to  
               use syringe epinephrine kits in place of EpiPen to save  
               money;


             aa)  After recent widespread criticism, Mylan said it would  
               expand access and increase benefits to programs that it  
               uses to help consumers pay less, but those changes do not  
               alter the prices that insurers and employers pay. Those  
               institutions will still face the brunt of the impact from  
               the price hikes; and,


             bb)  Offering co-payment assistance and free product to  
               consumers is part of the standard playbook for  
               manufacturers of expensive drugs. Efforts by drug makers to  







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               shield consumers from the out-of-pocket costs associated  
               with the rapidly increasing cost of their medications  
               ignores the fact that insurance companies bear the brunt of  
               these unreasonable price increases, which results in higher  
               premiums for all consumers.


          2)Declares that unnecessary and unexplained increases in  
            pharmaceutical pricing is a harm to our health care system  
            that will no longer be tolerated because the system cannot  
            sustain it.


          3)Urges:


             a)   The FDA to reconsider its denial of approval for generic  
               alternatives to EpiPen; 


             b)   The Congress of the United States to investigate the  
               impact that Mylan's monopoly has had on the price hikes for  
               EpiPen; and, 


             c)   The Congress and President of the United States to take  
               action to limit the unrestrained ability of drug  
               manufacturers to increase prices based only on what the  
               market can bear rather than on providing a fair return on  
               investment.


          Comments


          Author's statement.  During the same time that Mylan was  
          steadily increasing the price of EpiPens to reach over 500% of  
          its list price in 2007, the company began a marketing and  
          lobbying effort to increase demand for this product, which  
          included the passage of federal and state legislation. In 2010,  
          the FDA changed its recommendations so that two EpiPens be sold  
          in a package instead of one and that they be prescribed for  
          at-risk patients, not just those with allergies. In 2013,  
          Congress passed the School Access to Emergency Epinephrine Act  







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          to provide an incentive to states to boost the supply of  
          epinephrine at schools. Following this, a number of states,  
          including California, passed laws requiring public schools to  
          have epinephrine. Mylan has an effective monopoly that it is  
          using to maximize profit because there is no equivalent generic  
          competitor.  In California, over half of our children are  
          insured through Medi-Cal, therefore the public ends up paying a  
          large share of the cost of the drug. After recent widespread  
          criticism, Mylan announced that it would expand access and  
          increase benefits to programs that it uses to help consumers pay  
          less, but those changes do not alter the prices that insurers,  
          employers, emergency responders, and schools pay. Those  
          institutions will still face the brunt of the impact from the  
          price hikes. Offering co-payment assistance and free product to  
          consumers is part of the standard playbook for drug companies.  
          Efforts by drug makers to shield consumers from the  
          out-of-pocket costs associated with the rapidly increasing cost  
          of their medication ignores the fact that insurance companies  
          bear the brunt of these unreasonable price increases and results  
          in higher premiums for all consumers. The drug maker Mylan is  
          taking advantage of its monopoly and exploiting a life-saving  
          medication that countless families across California and the  
          nation rely on. Something must be done now to correct the market  
          for this particular drug. The federal Administration and  
          Congress have the power to limit the unrestrained ability of  
          Mylan to gouge our health care system, and they should use it.


          Anaphylaxis.  According to the National Institutes of Health,  
          anaphylaxis is a severe, whole-body allergic reaction to a  
          chemical that has become an allergen. After being exposed to a  
          substance, such as bee sting venom, the person's immune system  
          becomes sensitized to it. When the person is exposed to that  
          allergen again, an allergic reaction may occur. Anaphylaxis  
          happens quickly after the exposure, is severe, and involves the  
          whole body. Tissues in different parts of the body release  
          histamine and other substances. This causes the airways to  
          tighten and leads to other symptoms. Some drugs (such as  
          morphine, x-ray dye, and aspirin) may cause an anaphylactic-like  
          reaction when people are first exposed to them. These reactions  
          are not the same as the immune system response that occurs with  
          true anaphylaxis. However, the symptoms, risk for complications,  
          and treatment are the same for both types of reactions. Risks  
          include a history of any type of allergic reaction. 







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          Epinephrine auto-injector.  An EAI is a medical device used to  
          deliver a measured dose of epinephrine using auto-injector  
          technology, most frequently for the treatment of acute allergic  
          reactions to avoid or treat the onset of anaphylaxis. According  
          to the Food Allergy Research and Education Web site, epinephrine  
          is a highly effective medication that can reverse severe  
          symptoms of anaphylaxis but must be administered promptly to be  
          most effective. EpiPen and EpiPen Jr. (the version for smaller  
          children) are commonly used EAIs. According to Mylan, which  
          makes the two products, EpiPen contains 0.3mg of epinephrine and  
          is intended for those who weigh 66 pounds or more, while EpiPen  
          Jr. contains 0.15mg and is intended for patients weighing  
          between 33 to 66 pounds. Mylan's product information states that  
          it is not known if EpiPen and EpiPen Jr. are safe and effective  
          in children who weigh less than 33 pounds. The devices are  
          intended to be injected into the middle of the outer thigh, and  
          patients are directed not to inject the device into a vein,  
          buttock, fingers, toes, hands, or feet.  


          EpiPens and generic alternatives. Epinephrine on its own is  
          extremely cheap, just a few cents per dose. The auto-injecting  
          device is the product that is protected under patent in this  
          case.  Mylan "owns" the EpiPen auto-injector device design, so  
          competitors must find work-arounds in their devices to deliver  
          the epinephrine into the patient's body. This task has proven to  
          be difficult for EpiPen competitors. In 2015, Sanofi US issued a  
          voluntary nationwide recall of its Auvi-Q due to potential  
          inaccurate dosage delivery.  In 2016, the FDA rejected Teva  
          Pharmaceutical's generic epinephrine injector because it had  
          reliability issues and therefore wasn't medically equivalent.  
          Another company, Twinject, also discontinued their injectors in  
          2012.  A generic product called Adrenaclick is on the market,  
          but is not very popular and is not always covered by insurers.  
          On August 29, 2016, Mylan announced it would offer the first  
          generic to the EpiPen for $300, a 50% discount from the brand  
          price.


          Congressional action.  Several different letters from the United  
          States Congress have been sent to the Chief Executive Officer of  
          Mylan in the past two weeks, following the most recent increase  







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          to the price of EpiPen.  These letters include one from the  
          House of Representative's Committee on Oversight and Government  
          Reform, signed by the chair as well as the ranking member; a  
          letter signed by 20 Democratic members of the U.S. Senate; and,  
          a letter from Senator Charles Grassley, Chairman of the  
          Committee on the Judiciary. The letter from the House Committee  
          on Oversight and Government Reform requested a number of  
          documents from Mylan, including documents relating to the  
          company's gross and net revenues from the sales of the EpiPen  
          since its acquisition, documents relating to the company's  
          expenses from the manufacture and sale of the EpiPen, and any  
          cost estimates, profit projections, or other anlayses relating  
          to the company's current and future sales of the EpiPen. Senator  
          Grassley's letter requested that Mylan explain the changes it  
          has made to EpiPen since the acquisition that have caused it to  
          increase the price, any analyses conducted by Mylan in  
          determining the price of EpiPens, and Mylan's advertising budget  
          for the product. The letter signed by the Democratic members of  
          the U.S. Senate requested answers to a number of questions,  
          including the number of consumers who have used certain consumer  
          savings assistance programs offered by Mylan, and how Mylan  
          justifies charging $600 for the branded product when it claims  
          that the new generic alternative it will offer at $300 will be  
          identical to the brand name version.


          Related/Prior Legislation


          AB 1386 (Low, 2016) permits a health care provider to issue a  
          prescription for, and a pharmacy to dispense, an EAI to an  
          authorized entity, which is defined as any entity or  
          organization that employs at least one person that has completed  
          an approved training course on the emergency use of EAIs. Also,  
          revises the definition of "epinephrine auto-injector" to  
          eliminate the reference to a spring-activated needle, and  
          instead defines this term as a "disposable delivery device  
          designed for automatic injection of a premeasured dose of  
          epinephrine into the human body to prevent or treat a  
          life-threatening allergic reaction. AB 1386 has been passed by  
          the Legislature, and is pending action by the Governor.


          SB 1266 (Huff, Chapter 321, Statutes of 2014) required school  







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          districts, COE, and charter schools provide emergency EAIs to  
          school nurses or trained personnel who have volunteered, as  
          specified.  Additionally, it authorized school nurses or trained  
          personnel to use the EAIs to provide emergency medical aid to  
          persons suffering, or reasonably believed to be suffering, from  
          an anaphylactic reaction.


          SB 669 (Huff, Chapter 725, Statutes of 2013) permitted a  
          prehospital emergency medical care person or lay rescuer to  
          obtain and use an EAI in emergency situations with certification  
          of training, as specified.   


          SB 1069 (Pavley, Chapter 512, Statutes of 2010), in addition to  
          expanding the scope of practice for physician assistants in  
          other instances, added physician assistants, in addition to  
          physician and surgeons, from whom a school pupil must obtain a  
          written statement in order to carry and self-administer a  
          prescription EAI.


          SB 1912 (Ashburn, Chapter 846, Statutes of 2004) permitted  
          pupils to carry and self-administer inhaled asthma medication or  
          an EAI at school, as specified.


          AB 559 (Wiggins, Chapter 458, Statutes of 2001) was identical to  
          AB 1791 (see below).


          AB 1791 (Wiggins, 2000) would have established provisions of law  
          that permit a school district or COE to provide emergency EAIs  
          to trained personnel, and permit trained personnel to utilize  
          these EAIs to provide emergency medical aid to persons suffering  
          from an anaphylactic reaction at a school or during a school  
          activity. The bill was vetoed by Governor Davis who stated that  
          the shortage of school nurses with the knowledge necessary to  
          administer medications would assure that the bulk of school  
          personnel administering epinephrine in emergencies would be lay  
          personnel. The Governor further stated that lay persons cannot  
          receive the necessary background in a limited training program  
          that would provide the essential medical judgment skills  
          required to administer medication in an emergency situation.







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          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified8/30/16)


          Amalgamated Transit Union 
          American Federation of State, County and Municipal Employees
          Anthem Blue Cross
          Association of California Life and Health Insurance Companies
          Blue Shield of California
          California Association of Health Plans
          California Health+ Advocates
          California Labor Federation
          California Professional Firefighters
          California School Employees Association, AFL-CIO
          California Teamsters Public Affairs Council
          Cigna
          Consumers Union
          Health Access California
          International Association of Machinists and Aerospace Workers
          International Federation of Professional & Technical Engineers
          International Longshore and Warehouse Union 
          Jockey's Guild
          Kaiser Permanente
          Screen Actors GuildAmerican Federation of Television and Radio  
          Artists
          Service Employees International Union California
          UNITE HERE!
          United Health Care Professionals
          United Nurses Association of California
          Utility Workers Union of America AFL-CIO


          OPPOSITION:   (Verified8/30/16)


          None received


          Prepared by:Melanie Moreno / HEALTH /







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          8/30/16 17:57:55


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