BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SJR 29| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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: SJR 29 Page 2 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 SJR 29 Page 3 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 SJR 29 Page 4 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 SJR 29 Page 5 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. SJR 29 Page 6 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 SJR 29 Page 7 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 SJR 29 Page 8 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. SJR 29 Page 9 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 / SJR 29 Page 10 8/30/16 17:57:55 **** END ****