BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON
          BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            SB 671          Hearing Date:    April 13,  
          2015
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          |Author:   |Hill                                                  |
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          |Version:  |February 27, 2015                                     |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Sarah Mason, Janelle Miyashiro                        |
          |:         |                                                      |
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                      Subject:  Pharmacy:  biological product.


          SUMMARY:  Authorizes a pharmacist to substitute an alternative  
          biological product when filling a prescription for a prescribed  
          biological product under specified circumstances.  

          Existing Federal law:
          
         1)The Food, Drug and Cosmetics Act (FDCA) requires drug  
            manufacturers to obtain approval of new drugs from the federal  
            Food and Drug Administration (FDA).  
         (21 U.S.C. Sec. 355)

         2)Prohibits a person from delivering for introduction into  
            interstate commerce any biological product unless a license is  
            issued pursuant to the Public Health Service Act (PHSA).  (42  
            U.S.C. Sec. 262)

         3)Creates an abbreviated pathway for biological products that are  
            similar to or interchangeable with licensed biological  
            products, known as the Biologics Price Competition and  
            Innovation Act of 2009 (BPCIA).  (42 U.S.C. Sec. 262 (k))

         4)Requires that, for a biological product to be considered  
            biosimilar to a reference product, data must be derived from  
            analytical, animal and clinical studies as specified.  (42  
            U.S.C. Sec. 262 (k)(2))








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         5)Clarifies that a product is biosimilar to a reference product  
            under the BPCIA if the proposed biosimilar product is highly  
            similar to the reference product, notwithstanding minor  
            differences in clinically inactive components, and that no  
            clinically meaningful differences exist between the proposed  
            biosimilar product and the reference product in terms of  
            safety, purity and potency.  (42 U.S.C. Sec. 262(i)(2)(A) and  
            (B))

         6)Clarifies that state law governs how and when pharmacists may  
            make prescription drug substitutions.  (1 Food and Drug Admin.  
            Sec. 13:197 (2011))

         7)States that new drugs cannot be introduced into interstate  
            commerce unless an approval of an application is filed by  
            either: 

             a)   Full report of investigations to be filed with an  
               application to the Secretary and which have been made to  
               show:
                  i)        Whether or not the drug is safe and effective  
                    for use.

                  ii)       A full list of the components and composition  
                    of the drug.

                  iii)      A full description of the methods used in, and  
                    the facilities and controls used for the  
                    manufacturing, processing, and packing of the drug.

                  iv)       Specimens of the labelling proposed to be used  
                    for the drug.

                  v)        Any assessments required under Section 355c.  
                    (21 U.S.C Section 355(b))

             a)   Abbreviated application of a new drug to be filed with  
               the Secretary and which must contain:

                  i)        Information to show that the conditions of use  
                    prescribed, recommended or suggested in the labeling  
                    proposed for the new drug have been previously  
                    approved.









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                  ii)       Information to show that the new drug has the  
                    same active ingredient(s) as the listed drug referred  
                    to.

                  iii)      Information to show that the route of  
                    administration, the dosage form, and the strength of  
                    the new drug are the same as those of the listed drug  
                    referred to.

                  iv)       Information to show that the labeling proposed  
                    for the new drug is the same as the labeling approved  
                    for the listed drug referred to unless the new drug  
                    and listed drug are produced or distributed by  
                    different manufacturers.  (21 U.S.C Section 355(j))

          1) Defines a biological product as a virus, therapeutic serum,  
             toxin, antitoxin, vaccine, blood, blood component or  
             derivative, allergenic product, protein (except for any  
             chemically synthesized polypeptide), or analogous product.   
             (42 U.S.C. Section 252i(1))

          2) Classifies insulin as a hormone and therefore regulates these  
             endocrine system derived drugs under the FDCA and not as  
             biological products under the PHSA.

          3) States that a drug intended for use is limited to use under  
             the professional supervision of a practitioner licensed by  
             law to administer the drug.  (21 U.S.C. Section 353(b))
          
          Existing California law: 
          
          1)Establishes the Food and Drug Branch (FDB) within the  
            California Department of Public Health (CDPH) to assure that  
            foods, drugs, medical devices, cosmetics and certain other  
            consumer products are safe and are not adulterated, misbranded  
            nor falsely advertised; and that drugs and medical devices are  
            effective.

          2)Defines biologics as human whole blood; human whole blood  
            derivatives specified by regulations; serum, vaccine, live  
            vaccine, killed vaccine, tissue vaccine, autogenous vaccine,  
            live virus, killed virus, live bacterial culture, killed  
            bacterial culture, bacterin, hormone, tissue extract, gland  
            extract, gland preparation, insulin, and similar products made  








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            from human or animal tissues or micro-organisms.  (Health and  
            Safety Code § 1600.1)  

          3)Under the Pharmacy Law, provides for the licensure and  
            regulation of pharmacies, pharmacists and wholesalers of  
            dangerous drugs or devices by the Board within the Department  
            of Consumer Affairs (DCA).  (Business and Professions Code  
            (BPC) § 4000 et seq.)  

          4)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  
            upon the prescription of a physician, dentist, podiatrist,  
            optometrist, veterinarian or naturopathic doctor.  (BPC §  
            4059)

          5)Authorizes pharmacists filling prescription orders for drug  
            products prescribed by their trade or brand names to  
            substitute generic drugs for orders if the generic contains  
            the same active chemical ingredients of equivalent strength  
            and duration of therapy, subject to a patient notification and  
            bottle labeling requirement, unless the prescriber specifies  
            that a pharmacist may not substitute another drug product by  
            either indicating on the form submitted for the filling of the  
            prescription drug orders "Do not substitute" or words of  
            similar meaning or selecting a box on the form marked "Do not  
            substitute."  (BPC § 4073)

          6)Authorizes pharmacists filling prescription orders for drug  
            products prescribed by their trade or brand names to  
            substitute a drug product with a different form of medication  
            with the same active chemical ingredients of equivalent  
            strength and duration of therapy as the prescribed drug  
            product when the change will improve the ability of the  
            patient to comply with the prescribed drug therapy, subject to  
            a patient notification and bottle labeling requirement, unless  
            the prescriber specifies that a pharmacist may not substitute  
            another drug product by either indicating on the form  
            submitted for the filling of the prescription drug orders "Do  
            not substitute" or words of similar meaning or selecting a box  
            on the form marked "Do not substitute."  
          (BPC § 4052.5)

          This bill: 








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          1)Defines "biological product" according to the definition  
            within the federal PHSA.

          2)Defines "interchangeable" as a biological product that the FDA  
            has determined meets the standards set forth in the BPCIA or  
            has been deemed therapeutically equivalent by the FDA as set  
            forth in the latest addition or supplement of the Approved  
            Drug Products with Therapeutic Equivalence Evaluations (known  
            as the Orange Book).

          3)Defines "prescription", with respect to a biological product,  
            as a prescription for a product compounded in an outsourcing  
            facility can qualify for exemptions from the FDA approval  
            requirements, under Section 503B of the FDCA.

          4)Updates permitted functions for pharmacists to allow a  
            pharmacist to substitute an alternative biological product  
            only for a prescribed biological product  only if  :

             a)   The alternative biological product is interchangeable.

             b)   The prescriber has not personally indicated, either  
               orally or in his or her own handwriting "Do not substitute"  
               or words of similar meaning.  Clarifies that a prescriber  
               may still check a box on the prescription marked "Do not  
               substitute" if the prescriber personally initials the box  
               or checkmark.  Clarifies that for electronic data  
               transmission prescriptions, a prescriber may indicate "Do  
               not substitute" or words of similar meaning, or may check a  
               box on the prescription marked "Do not substitute" but is  
               not required to manually initial this indication.

             c)   Within a reasonable time following the dispensing of a  
               biological product, a dispensing pharmacist or the  
               pharmacist's designee shall communicate to the prescriber  
               the specific biological product provided to the patient,  
               including the name of the biological product.  Provides  
               that the communication shall be conveyed by making an entry  
               into an interoperable electronic medical records system,  
               through electronic prescribing technology, or a pharmacy  
               record that is electronically accessible by the prescriber.  
                Provides that otherwise, the pharmacist or pharmacist's  
               designee shall communicate the name of the biological  








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               product dispensed to the prescriber using facsimile,  
               telephone, electronic transmission or other prevailing  
               means.

          5)Clarifies that communication is not required to be made to a  
            prescriber when either there is no FDA-approved  
            interchangeable biological product or a refill prescription is  
            not changed from the product dispensed on the prior filing of  
            the prescription.

          6)Provides that selection of an alternative biological product  
            is within the discretion of the pharmacist except when a  
            prescriber indicates "Do not substitute".  States that a  
            pharmacist who selects the biological product according to the  
            provisions of this bill assumes the same responsibility for  
            substituting an alternative biological product as would be  
            incurred in filling a prescription for a biological product  
            prescribed by name.  

          7)Removes liability of a prescriber for an act or omission by a  
            pharmacist in selecting, preparing or dispensing an  
            alternative biological product.

          8)Prohibits a pharmacist from selecting an alternative  
            biological product unless the cost to the patient is the same  
            or less than the cost of the prescribed biological product,  
            including any professional fee that may be charged by the  
            pharmacist.

          9)Applies the provisions to all prescriptions, including those  
            presented by or on behalf of persons receiving assistance from  
            the federal government or pursuant to the Medi-Cal Act  
            (Welfare and Institutions Code, Section 14000-14199.2 et.  
            seq.).

          10)Requires a communication be made to the patient when an  
            alternative biological product is substituted for a biological  
            product. 

          11)Requires the Board to maintain a link to the current list, if  
            available, of biological products determined by the FDA to be  
            interchangeable, on its website.

          12)Clarifies that a pharmacist may still give immunizations  








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            pursuant to a protocol with a prescriber. 

          13)Clarifies that a disability insurer or health care service  
            plan is not prohibited from requiring prior authorization or  
            imposing other appropriate utilization controls in approving  
            coverage for any biological product.

          14)Adds all of the above provisions to the section of Pharmacy  
            Law specifying actions for substitution of a generic drug.

          
          FISCAL  
          EFFECT:  Unknown.  This bill has been keyed "fiscal" by  
          Legislative Counsel.  

          
          COMMENTS:
          
         1.Purpose.  The  Author  is the  Sponsor  of this bill.  According to  
            the Author, "SB 671 updates California law so when the federal  
            Food and Drug Administration (FDA) approves interchangeable  
            biosimilars, California pharmacists can substitute lower cost  
            biosimilars for brand name biologics."  According to the  
            Author, "on March 6th, the FDA approved the first biosimilar,  
            (Zarxio) and there are at least four more applications in the  
            approval pipeline.  Therefore, it is essential that a bill be  
            passed this year making clear the procedures for  
            substitution."  The Author notes that "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."  
            
            According to information provided by the Author, this bill  
            allows a pharmacist to substitute a biosimilar medication for  
            a brand biologic when the biosimilar is deemed interchangeable  
            by the FDA which mirrors California's patient protections for  
            generic pill substitution and adds a provision that requires a  
            pharmacist, within a reasonable amount of time after the  
            substitution is made, to enter information about the biologic  
            product dispensed into an interoperable patient record system  
            or record system accessible to the prescriber. If that cannot  
            be done, the pharmacy will be required to communicate  








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            information about the dispensed product to the patient's  
            prescriber.  The Author states that no communication is  
            required if no interchangeable biosimilar is available or for  
            a refill of an existing prescription.
            
            According to information provided by the Author, "a  
            communication to the prescribing physician after dispensing  
            does not alter the policy goal of offering a lower cost option  
            for patients.  The purpose of prescriber communication is to  
            provide a record of the substitution, in the event of an  
            adverse reaction, or other clinical responses to the  
            biologic."  Background information from the Author notes that  
            there is nothing in this legislation that will impact a health  
            plan's ability to make changes to its preferred drug lists or  
            formularies or any other aspect of a health plans' commercial  
            business.  Existing law and current practice afford health  
            plans the ability to structure their prescription drug  
            benefits in such a way, either through tiered coverage and/or  
            preferred drug lists that would incentivize or require the  
            dispensing of the biosimilar drug product over the biologic.   
            In that background information, the Author adds that, for  
            example, health plans could limit their prescription drug plan  
            coverage to biosimilars or charge higher co-payments for the  
            biologic.  In that instance, the health plan formulary would  
            eliminate the substitution issue completely, as the biosimilar  
            would be a "preferred" drug product in the policy.  The Author  
            states that ultimately, through use of their formularies,  
            health plans will be able to drive utilization of biosimilars.  
             This is how health plans currently incentivize the use of  
            generic drugs or lower cost therapeutically similar drugs over  
            certain branded drugs.

          2.Biologics.  Biologic medicines are sensitive medications that  
            typically treat very serious diseases and conditions,  
            including blood conditions, cancers, immune disorders like  
            Rheumatoid Arthritis, Psoriasis and Crohn's Disease and  
            neurological disorders like Multiple Sclerosis.  These  
            treatments are almost exclusively administered in physician's  
            offices, oncology clinics, specialty pharmacies, hospitals or  
            dialysis centers.  Biological products are generally derived  
            from living material, human, animal, or microorganism and FDA  
            regulations specify that biological products include  
            blood-derived products, vaccines, in vivo diagnostic  
            allergenic products, immunoglobulin products, products  








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            containing cells or microorganisms, and most protein products.  
             These treatments are not widespread but rather used as  
            specialty drugs to treat very ill patients; according to a  
            MarketScan report, there were almost 380 million pills  
            dispensed in California in 2011, with only 1.7 biologic  
            prescriptions dispensed per week from the over 5,000 retail  
            pharmacies in California, representing just 13 percent of all  
            prescriptions dispensed by retail pharmacies.    
            
            According to the FDA, biologics are regulated under the  
            federal PHSA while drugs, including insulin and other hormone  
            therapies, are regulated under the FDCA.  Both the FDA's  
            Center for Drug Evaluation and Research and Center for  
            Biologics Evaluation and Research have regulatory  
            responsibility for therapeutic biological products, including  
            premarket review and oversight.  Following initial laboratory  
            and animal testing that show the use of a particular  
            biological product in humans is reasonably safe, biological  
            products (like other drugs), can be studied in clinical trials  
            in humans under an investigational new drug application.  If  
            trials and studies demonstrate that a product is safe and  
            effective for its intended use, the FDA may then approve the  
            market of a biologic by granting a biologics license.  There  
            are some individuals who are not good candidates for use of  
            therapeutic biological products, such as those who are  
            immunocompromised.  Individuals can also have or develop  
            allergic or other adverse reactions to biological products. 

            The FDA defines a generic drug as the same as a brand name  
            drug in dosage, safety, strength, how it is taken, quality,  
            performance, and intended use.  Before approving a generic  
            drug product, FDA requires many rigorous tests and procedures  
            to assure that the generic drug can be substituted for the  
            brand name drug.  According to the FDA, it bases evaluations  
            of substitutability, or "therapeutic equivalence," of generic  
            drugs on scientific evaluations.  Generic drug products must  
            contain the identical amounts of the same active ingredient(s)  
            as the brand name product.  A drug that is determined to be  
            "therapeutically equivalent" can be expected to have equal  
            effect and no difference when substituted for the brand name  
            product.  The FDA produces a publication titled "Approved Drug  
            Products with Therapeutic Equivalence Evaluations" (the List,  
            commonly known as the Orange Book) which identifies drug  
            products approved on the basis of safety and effectiveness  








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            under the FDCA.  According to the FDA, since February 2005 it  
            has been providing daily Electronic Orange Book (EOB) updates  
            as a means of providing product information for new generic  
            drug approvals.  FDA notes that daily generic updates provide  
            the consumer with the current list of approved generic  
            products which is important for substitution purposes.  

          3.Alternative Biological Products - Biosimilars.  Biologics,  
            often referred to as originator biological products or  
            reference biological products, when discussing  
            interchangeability and therapeutic equivalence, are large,  
            complex protein molecules used in the treatment, diagnosis or  
            prevention of disease.  These are quite different from small  
            molecule drugs, pills, which are not as structurally complex  
            and are instead relatively simple, organic substances produced  
            by chemical methods.  Biologic medicines, on the other hand,  
            are made in living organisms to produce proteins by  
            genetically modifying cell constructs or cell lines.   
            Biologics are grown, cultivated and purified and are typically  
            administered as injectables.
            
            Biosimilars are similar but not identical versions of the  
            original biologic.  The active ingredient of a biosimilar is  
            expected to closely resemble that of the original biologic and  
            unlike generic pills which require the active ingredient to be  
            identical, the exact manufacturing process of an original  
            biologic cannot be exactly duplicated.  Biosimilars are not  
            clinically identical to their reference products.  Biosimilars  
            have been defined by the World Health Organization as "a  
            biotherapeutic product which is similar in terms of quality,  
            safety and efficacy to an already licensed biotherapeutic  
            product," by the European Medicines Agency as a "copy version  
            of an already authorized biological medicine product with  
            demonstrated similarity in physiochemical characteristics,  
            efficacy and safety, based on a comprehensive comparability  
            exercise," and by the FDA as a biological product which is  
                                                                       "highly similar to the reference 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  
            safety, purity and potency of the product."    

            In response to increases in an aging population and larger  
            numbers of patients suffering from chronic disease, there has  








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            been a rise in use of biologics, and accordingly a rise in the  
            production efforts of biosimilars.  Biosimilars go through an  
            extensive review process and manufacturers are required to  
            submit immense studies and data demonstrating a products'  
            efficacy and ensuring it is safe for use by consumers.   
            Manufacturers also have to establish ongoing monitoring  
            programs to ensure the safety of biosimilars.  While  
            biosimilars are currently available in the EU, and other  
            nations are in the process of adopting guidelines and  
            regulatory processes, biosimilars are still a relatively new  
            option in the larger health care delivery and treatment  
            conversation.  

            A pathway for biosimilar regulation in the U.S. was  
            established as a provision of the 2008 Patient Protection and  
            Affordable Care Act (ACA) and in 2012 the FDA issued draft  
            guidelines for biosimilars.  The guidance included which types  
            of studies manufacturers should undertake in order to ensure  
            product safety, potency and purity.  In addition to the draft  
            guidelines for biosimilars the FDA has also compiled a list of  
            biological products, including any biosimilar and  
            interchangeable biological products licensed by the FDA under  
            the PHSA.  This list, known as the "Purple Book", includes the  
            date a biological product was licensed under the PHSA and  
            whether FDA evaluated the biological product for reference  
            product exclusivity under section 351(k)(7) of the PHSA.  The  
            Purple Book is analogous to the Orange Book.  The Purple Book  
            will enable a prescriber or dispenser of a biological product   
            to see whether a biological product licensed under the PHSA  
            has been determined by FDA to be biosimilar to or  
            interchangeable with a reference biological product (an  
            already-licensed FDA biological product).  Biosimilar and  
            interchangeable biological products licensed under section  
            351(k) of the PHSA will be listed under the reference product  
            to which biosimilarity or interchangeability was demonstrated.  
             These lists will be updated periodically when FDA licenses a  
            biological product and/or makes a determination regarding date  
            of first licensure for a biological product licensed under the  
            PHSA.  

            Currently, only one biosimilar product has been approved by  
            the FDA.  On March 6, 2015, the FDA approved, Zarxio  
            (filgrastim-sndz).  Zarxio is manufactured by Sandoz, Inc. and  
            is biosimilar to Amgen Inc.'s Neupogen (filgrastim).   








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            Filgrastim is used to treat patients undergoing chemotherapy  
            by stimulating the body's neutrophil (white blood cell)  
            production.  Zarxio has been approved as biosimilar to  
            Neupogen but not as an interchangeable product.  The FDA  
            approved Zarxio based on structural and functional  
            characterization, animal study data, human pharmacokinetic and  
            pharmacodynamics data, clinical immunogenicity data and other  
            clinical safety and effectiveness data that demonstrated  
            Zarxio is biosimilar to Neupogen.

            There are currently no interchangeable biological products  
            approved by the FDA and the timeline for approval of an  
            interchangeable biological product is unknown.

          4.The Prescription Drug Pinch on Californians' Wallets and  
            Potential Cost Savings From Biosimilars.  Costs of  
            prescription medication have skyrocketed over the past number  
            of years.  According to a 2008 report issued by the Kaiser  
            Family Foundation on prescription drug trends, spending in the  
            U.S. for prescription drugs was $216.7 billion in 2006, more  
            than 5 times the $40.3 billion spent in 1990.  In response,  
            many consumers are turning to a variety of methods to reduce  
            their prescription costs including requesting cheaper drugs or  
            generic drugs from their physicians and pharmacies, using the  
            Internet and other sources to make price comparisons, using  
            the Internet to purchase drugs, buying at discount stores,  
            buying over-the-counter instead of prescribed drugs, buying  
            drugs in bulk and pill-splitting, using mail-order pharmacies,  
            and using pharmaceutical company or state drug assistance  
            programs.  The report stated that 62 percent of physicians say  
            they switch patients to less expensive drugs after discussing  
            out-of-pocket costs of medicines with patients.  This  
            financial burden leads to many patients with legitimate  
            chronic illnesses to forgo prescribed medications and  
            adversely affect their health.

            According to a 2005 Federal Trade Commission report on  
            Pharmacy Benefit Managers (PBMs) and mail-order pharmacies,  
            many health plan sponsors offer their members prescription  
            drug insurance and hire PBMs to manage these pharmacy benefits  
            on their behalf. As part of the management of these benefits,  
            PBMs assemble networks of retail and mail-order pharmacies so  
            that the plan sponsor's members can fill prescriptions easily  
            and in multiple locations.  When a consumer fills a  








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            prescription at a local pharmacy, the pharmacist usually asks  
            whether the consumer has insurance to cover the prescription's  
            cost. If there is coverage, the consumer provides the  
            insurance card to the pharmacist. While the pharmacist fills  
            the prescription, sophisticated computer interactions between  
            the pharmacy and the PBM ensure that the prescription is  
            filled according to the insurance coverage provided by the  
            plan sponsor.   According to the report, the consumer usually  
            is unaware of these processing interactions, and the  
            consumer's only additional responsibility is to pick up the  
            filled prescription and pay the retail pharmacy the copayment  
            that is due.

            A 2013 New York Times article noted that drugs account for  
            about 15 percent of the nation's health care expenditures and  
            that while there appear to be small decreases in spending on  
            prescription drugs, costs associated with specialty drugs like  
            biologics increased almost 20 percent.  Out-of-pocket costs to  
            patients are typically higher to receive biologics than for  
            generic drugs and while biosimilars may provide significant  
            cost savings, they will not be discounted at near the rate as  
            generic drugs.  Biosimilars are still seen, though as playing  
            an important part in medication cost reductions by providing  
            cost-effective alternatives to very expensive originator  
            biological products and are anticipated to play a key role in  
            the treatment of illnesses and chronic conditions in the U.S.   
            According to a 2007 Congressional Budget Office (CBO) report  
            issued when the BPCIA was being considered in Congress, "In  
            recent years, total spending on biologics has grown rapidly,  
            with nominal spending growth averaging roughly between 15  
            percent and 20 percent annually; spending amounted to about  
            $40 billion in 2006."  The CBO report noted that BPCIA would  
            reduce total expenditures on biologics by $0.2 billion over  
            the 2009-2013 period, and by about $25 billion over the  
            2009-2018 period. (Over that 10-year period, such savings  
            would equal roughly 0.5 percent of national spending on  
            prescription drugs, valued at wholesale prices.)  The report  
            estimated that as a result of the Act, direct spending by the  
            federal government would decrease by $46 million over  
            2009-2013 period, and by $5.9 billion over the 2009-2018  
            period.  A November 2014 RAND study similarly identified a  
            $44.2 billion reduction in direct spending on biologic drugs  
            from 2014 to 2024, or about 4 percent of total biologic  
            spending over the same period, with a range of $13 billion to  








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            $66 billion.  

          5.Similar Legislative Efforts in Other States.  In the past two  
            years, at least twenty-three states have considered, or are in  
            the process of considering, legislation similar to this  
            measure that outlines procedures by which a pharmacist may  
            substitute a prescribed biologic drug for a biosimilar.  The  
            bills and surrounding conversation in these states mirror what  
            is pending in California.  Like this bill, many of the 2015  
            versions create requirements related to  all  biological product  
            substitution if there is an FDA approved interchangeable  
            biological product and many do make specific reference to  
            "biosimilars" but rather use the term "alternative biological  
            product".   As reported in a recent Pew Charitable Trusts  
            article, most of the measures proposed this year require  
            notification to occur after the dispensing of the biosimilar  
            and that where possible, notification be made through  
            electronic medical records.  Most of the new bills reduce the  
            period of time that pharmacies must keep the record of  
            substitution from five years to two and the new bills use the  
            word "communicate" rather than "notify," which the article  
            cites as significant to biosimilar manufacturers who want to  
            avoid any hint to the public that biosimilars are inferior  
            products.  

          6.Prior Related Legislation.  SB 598  (Hill) of 2013 would have  
            authorized pharmacists to substitute a biosimilar for a  
            biologic under specified circumstances, including a  
            requirement that notification of the substitution be provided,  
            and defined "biological product," "biosimilar," and  
            "interchangeable" according to their definitions within the  
            PHSA.  (  Status:   The bill was vetoed by Governor Brown who  
            noted that "CalPERS and other large purchasers warn that the  
            requirement itself would cast doubt on the safety and  
            desirability of more cost-effective alternatives to  
            biologics?.The FDA, which has jurisdiction for approving all  
            drugs, has not yet determined what standards will be required  
            for biosimilars to meet the higher threshold for  
            "interchangeability.")

             AB 1139  (Lowenthal) of 2013 would have authorized 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.  (  Status:   The bill was never heard in a  








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            policy committee of the Legislature.)

          7.Arguments in Support.  The  Alliance of Specialty Medicine  , a  
            coalition of national medical specialty societies representing  
            more than 100,000 physicians and surgeons, is supportive of  
            this bill with amendments, stating that this bill addresses  
            key policy issues to ensure patient safety is preserved,  
            including physician authority to prevent substitutions and  
            ensuring that the treating physician is notified if another  
            version of the biologic medicine is substituted for the  
            version prescribed by the doctor but remains concerned that  
            the bill fails to define reasonable time regarding the timely  
            notification of a substitution to the prescriber and asks that  
            the Author further define "reasonable time". 

            According to the  Arthritis Foundation  , this bill takes a step  
            in the right direction to ensure that both the patient and the  
            physician are notified and will encourage a high level of  
            communication between all players on the healthcare team.
            
            The  Biotechnology Industry Organization (BIO  ) writes that this  
            bill ensures patients and their physicians remain in control  
            of their medical treatment options as the market for complex  
            biologics evolves.  

             Express Scripts  notes that it worked closely with stakeholders  
            on both sides to find consensus and that this bill takes a  
            very important step forward, ensuring that less expensive  
            FDA-approved interchangeable biologics can be automatically  
            substituted by a pharmacist when they become available.

            According to  Johnson & Johnson  , this bill updates Pharmacy Law  
            to allow for substitution of a new class of FDA-approved  
            medicines and will do so in a manner than ensures patient  
            access to these important medications while providing for a  
            communication about the substitution to be shared with the  
            patient's health care provider.

             Lilly USA, LLC  supports this bill to ensure that all biologics  
            are treated equally in California and to ensure that all  
            patients taking biologic medicines are afforded the same  
            patient protections.

             Merck & Co., Inc  and  Genentech  write that communicating  








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            substitution of an interchangeable biosimilar to a patient's  
            prescriber is a safeguard that is critical in the event of an  
            adverse reaction or change in a patient's chronic condition.

            The  National Black Nurses Association, Inc. (NBNA)  encourages  
            state legislators and regulators to incorporate strong  
            language requiring active pharmacist-prescriber communication  
            and states that it is critical for prescribing physicians to  
            have knowledge of which biologic has been dispensed to a  
            patient as a means of supporting patient care.  NBNA  
            highlights the complexity and variability of treatment  
            paradigms using biologics which will be a continuing concern  
            to prescribers serving American Indian and Alaska Native,  
            African-American, Asian American and Hispanic patients and  
            states that to this end, both physicians and patients must be  
            aware of which complex biological product has been dispensed.

            According to the  National Kidney Foundation  , differences in  
            composition of biosimilars compared to the original innovator  
            product are likely to occur and to monitor for adverse events,  
            it is vital that patients and physicians know which medication  
            was dispensed.  The kidney community is especially cautious  
            regarding the possibility of substituting or alternating  
            between reference drugs and biosimilars or between biosimilars  
            based on allergic reactions in patients not seen during  
            clinical trials for treatments used by kidney patients.

            According to Novartis Pharmaceuticals  , California law already  
            addresses the process pharmacists must follow to substitute  
            traditional, generic drugs for their branded equivalent and  
            this bill would create a similar process for substituting a  
            branded biologic drug with a biosimilar drug the FDA has  
            designated as interchangeable.  Novartis states that many  
            provider and patient groups have studies the issue of  
            biologics and interchangeable biologic substitution and agree  
            with the principles for substitution included in this bill.

             Novo Nordisk., Inc.  states that unless California's Pharmacy  
            Practice Act is changed, the substitution of several proteins  
            approved under what is known as the 505b pathway numbering  
            more than 30 product categories will provide difficult given  
            an inconsistency between state and federal statute.  According  
            to the company, this bill resolves the inconsistency by  
            ensuring that all proteins eligible for potential therapeutic  








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            substitution, should the FDA grant such a designation, are  
            treated the same in its defined substitution process.  The  
            bill bridges the four year gap (since FDA approval pathways  
            merge in 2020) by creating a substitution process for all  
            protein medications considered biologics per guidance from  
            FDA.

             UCB, Inc  . writes that it is important to have state  
            substitution laws in place to address the following issues  
            that are critical for patient safety:  substitution should  
            only occur when the FDA has designated a biologic product as  
            interchangeable; prescribers should be able to prevent  
            substitution; a pharmacist shall communicate with the  
            prescriber after a substitution occurs; patients should be  
            notified when a substitution occurs and; records should be  
            kept of the substitution.
              
          8.Arguments in Opposition.  The  California Pharmacists  
            Association (CPhA)  is opposed to this bill unless amendments  
            are taken.  According to CPhA, pharmacists and other  
            healthcare providers must be allowed to work together, using  
            their professional judgment to ensure optimal medication  
            therapy for their patients, unhindered by burdensome or  
            unnecessary statutory frameworks.  CPhA notes that many  
            pharmacists are unable to send the electronic communications  
            authorized in the bill due to current technological  
            limitations, for example, the inability of electronic  
            prescribing technology to allow pharmacies to communicate  
            information back to prescribers.  The group also states that  
            as the bill is currently drafted, all pharmacists selecting  
            alternative products or dispensing biological products for  
            which there is an approved interchangeable biosimilar product  
            available will face untenable liability exposure, depending  
            upon whether each individual prescriber has access to specific  
            electronic records systems and that it is impossible for  
            pharmacists to know that they are complying with the bill's  
            mandates unless they first confirm with each prescriber  
            whether or not they access certain electronic records systems.
            
            According to the  California Retailers Association (CRA)  , which  
            is also opposed to this bill unless it is amended, this bill  
            creates new and unnecessary requirements for the substitution  
            of interchangeable biosimilar products, effectively putting  
            into place additional hurdles that would discourage the  








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            dispensing of biosimilar products.  While CRA appreciates use  
            of the verb "communicate" over prior efforts using  
            "notification", the organization still believes this creates  
            access challenges, negatively affects the acceptance of  
            interchangeable biosimilars and slows anticipated  
            cost-savings, forcing patients to pay more out-of-pocket  
            costs.  CRA is also concerned that the bill does not require  
            acknowledgement by the prescriber that notification from the  
            pharmacy was made so it remains questionable whether or not  
            all of the effort by CRA-member pharmacies will actually be  
            acknowledged and kept by the prescriber or simply get lost in  
            a physician's office.

             CVS Health  is also opposed to this bill unless amended,  
            writing that any communication potentially delaying prescriber  
            or patient acceptance or creating doubt as to the safety  
            and/or efficacy of FDA-approved interchangeable biosimilars is  
            wholly unnecessary and a disservice to patients and payers in  
            the U.S.  CVS Health believes that once the standard for  
            interchangeable is met, pharmacists, health plans and patients  
            should find their path to the least expensive therapy  
            unencumbered.  

            The  National Association of Chain Drug Stores (NACDS)  , which  
            has also taken an oppose unless amended position on this bill,  
            is concerned that this bill would undermine dispensing of  
            cost-effective biologic medications and that in requiring  
            pharmacies to inform physicians of the drug manufacturer and  
            name for each biologic or biosimilar drug dispensed, this  
            legislation imposes a corresponding obligation on physicians  
            to maintain the information provided by pharmacies in  
            patients' charts, even if not explicitly stated.  NACDS also  
            believes that it is important to maintain focus on patient  
            care issues that need resolution, and not to overwhelm  
            prescribers with information that is likely irrelevant for the  
            vast majority of patients and is not guaranteed to make it  
            into patients' charts.

            According to the  Pharmaceutical Care Management Association  
            (PCMA)  , the notifications in this bill are unnecessary and  
            will prevent cost savings to patients and employers that can  
            be achieved with the use of interchangeable biosimilar  
            medications but the group will remove its opposition if the  
            Author accepts amendments using language from another of  








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            states that will make the notification process workable.

             Walgreens  is also opposed to this bill unless it is amended,  
            stating that it supports updating state laws to recognize and  
            allow for substitution of interchangeable biosimilars  
            consistent with current practice for generic drugs, however it  
            does not support efforts like this bill or efforts in the 22  
            other states considering identical legislation sponsored by  
            pharmaceutical manufacturers that impose special notification  
            for products the FDA has approved as interchangeable.   
            According to Walgreens, the passive notification process  
            accessible to providers by using an interoperable electronic  
            medical records system as this bill proposes is used for the  
            majority of retail chain prescriptions dispensed but not all  
            prescriptions.  Walgreens adds that most pharmacies expected  
            to dispense interchangeable biologics are specialty pharmacies  
            that dispense high complexity, high cost products for patients  
            with complex medical conditions to physician offices or  
            clinics where these can be administered, rather than  
            dispensing to patients and the system outlined in this bill  
            permitting communication to a prescriber would in fact be  
            unavailable for these settings, what Walgreens calls the  
            majority of pharmacies dispensing interchangeables.  

            The groups above requesting amendments to this bill have  
            proposed language that permits the entry of information into a  
            pharmacy benefit management system to constitute a  
            communication (which has been accepted in some of the other  
            legislation throughout the nation similar to this bill) and  
                                                        exempts biological products paid for in cash from being  
            subject to the notification requirements set forth in this  
            bill. 

            According to the  Academy of Managed Care Pharmacy (AMCP)  ,  
            which is opposed to this bill, the bill is problematic because  
            while the overall health industry continued to increase its  
            use of electronic technology, it has not yet reached a level  
            of participation by a majority of prescribers and pharmacies.   
            AMCP states that at this time, the use of an interoperable  
            health records system or other means of electronic interchange  
            between prescribers and pharmacists is not the primary method  
            of communication and adds that the burdensome restrictions in  
            this bill are intended to discourage substitution.









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             America's Health Insurance Plans (AHIP)  is opposed to this  
            bill, stating that the notification requirement in this bill  
            creates a false impression about the safety of biologics, will  
            hinder their use and creates unnecessary burdens.  According  
            to AHIP, legislation that limits biosimilar or interchangeable  
            biologic substitution is unnecessary, will increase costs for  
            consumers and employers and limit access to crucial therapies  
            and that the price of a biologic should not be a factor in  
            their use.

            According to the  California Association of Health Plans  , which  
            also opposes this bill, the before-the-fact administrative  
            burdens created in this bill will do little if anything to  
            ensure public safety and will increase the cost and access to  
            these life savings drugs. 

            The  National Community Pharmacists Association (NCPA)  is also  
            opposed to this bill, stating that patients have a long  
            standing, trusting relationship with their pharmacist and it  
            is clear that this bill does little more than set cumbersome  
            roadblocks to drive patients to higher cost products while  
            diminishing the ability of pharmacists to substitute  
            extensively evaluated and approved interchangeable cost saving  
            versions of these products, at the request of the prescribing  
            practitioner.
          
          9.Recommended Amendments the Author May Wish to Take in the  
            Senate Committee on Health.
          
             a)   The bill outlines a "reasonable time frame" by which  
               communication must be made to a prescriber when a  
               pharmacist has dispensed an alternative biological product.  
                To ensure clarity for pharmacists as well as for Board  
               enforcement purposes, the Author may wish to further define  
               a time frame by assigning a number of days.  The Committee  
               suggests five days as a reasonable amount of time for the  
               communication to be made following substitution of an  
               alternative biological product for a biological product.

               On page 2, line 11, strike "a reasonable time" and replace  
          with "five days".

                    (b) Within  a reasonable time   five days  following the  
                    dispensing of a biological product, a dispensing  








          SB 671 (Hill)                                           Page 21  
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                    pharmacist or the pharmacists' designee shall  
                    communicate to the prescriber the specific biological  
                    product provided to the patient, including the name of  
                    the biological product and the manufacturer. The  
                    communication shall be conveyed by making an entry  
                    into an interoperable electronic medical records  
                    system, through electronic prescribing technology, or  
                    a pharmacy record that is electronically accessible by  
                    the prescriber.  Otherwise, the pharmacist or the  
                    pharmacist's designee shall communicate the name of  
                    the biological product dispensed to the prescriber  
                    using facsimile, telephone, electronic transmission,  
                    or other prevailing means, except that communication  
                    shall not be required in this instance to the  
                    prescriber when either of the following apply:

             b)   The bill creates a new definition of prescription for  
               prescriptions of biological product.  Within this  
               definition, the bill refers to Section 503B of the FDCA.   
               Section 503B deals with outsource facilities and  
               compounding drugs.  It appears that the Author's intention  
               is instead to reference Section 503(b) of the FDCA which  
               refers to labeling and dispensing of prescription drugs  
               thus the Author may wish to clarify that reference in this  
               bill.

                    On page 4, line 20, strike "503B" and replace with  
                    "503(b)"

                    (3) "Prescription," with respect to a biological  
                    product, means a prescription for a product that is  
                    subject to Section  503B   503 (b)  of the federal Food,  
                    Drug, and Cosmetic Act (21 U.S.C. Sec. 353(b)).
          
             c)   The bill clarifies that its provisions do not prohibit  
               pharmacists from administering immunizations (biological  
               products in some instances) and references authority for  
               pharmacists to do so in BPC § 4052.  Advanced practice  
               pharmacists (APPs) were also provide authority to  
               administer immunizations in 2013 (SB 493, Hernandez,  
               Chapter 469, Statutes of 2013).  The Author may wish to add  
               reference to that authority for APPs administering  
               immunizations. 
          








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                    On page 4, line 23, after "4052" add " and 4052.8"

                    (i) This section shall not prohibit the administration  
                    of immunizations, as permitted in Section 4052  and  
                    4052.8  .
          
           
          NOTE  :  Double-referral to Senate Committee on Health.


          SUPPORT AND OPPOSITION:
           
          Support:  

          Arthritis Foundation
          Biotechnology Industry Organization (BIO)
          BIOCOM
          California Healthcare Institute (CHI)
          Express Scripts
          Genentech
          Hospira
          Johnson & Johnson
          Lilly USA, LLC
          Merck & Co., Inc.
          National Black Nurses Association, Inc.
          National Kidney Foundation
          Novartis Pharmaceuticals
          Novo Nordisk, Inc.
          Sandoz
          UCB, Inc.

           Support if Amended:

           Alliance of Specialty Medicine
           
          Oppose Unless Amended:

           California Pharmacists Association (CphA)
          California Retailers Association (CRA)
          CVS Health
          National Association of Chain Drug Stores (NACDS)
          Pharmaceutical Care Management Association (PCMA)
          Walgreens
           








          SB 671 (Hill)                                           Page 23  
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          Opposition:  

          Academy of Managed Care Pharmacy (AMCP)
          America's Health Insurance Plans (AHIP)
          California Association of Health Plans
          Kaiser Permanente
          National Community Pharmacists Association


                                      -- END --