BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 671    
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          |AUTHOR:        |Hill                                           |
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          |VERSION:       |April 14, 2015                                 |
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          |HEARING DATE:  |April 29, 2015 |               |               |
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          |CONSULTANT:    |Melanie Moreno                                 |
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           SUBJECT  :  Pharmacy:  biological product

         SUMMARY  :1.  Permits a pharmacist filling a prescription for a biological  
          product to select an alternative, interchangeable biological  
          product if the prescriber does not personally indicate "Do not  
          substitute," or words of similar meaning, as specified. 
          
          Existing federal law:
          1.Requires drug manufacturers to obtain approval of new drugs  
            from the federal Food and Drug Administration (FDA). 

          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).  

          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).  

          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.  

          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.  

          Existing state law: 







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          1.Establishes the Food and Drug Branch (FDB) within the  
            California Department of Public Health (DPH) 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  
            from human or animal tissues or micro-organisms.   

          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).  

          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.  

          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."  

          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  








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            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."  
          
          This bill:
          1.Permits a pharmacist filling a prescription for a biological  
            product to select an alternative biological product only if:

                  a.        The alternative biological product is  
                    interchangeable.  Defines "interchangeable" as a  
                    biological product that the FDA has determined meets  
                    standards specified in federal regulations 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; and,
                  b.        The prescriber does not personally indicate  
                    "Do not substitute," or words of similar meaning, as  
                    specified. Specifies that this does not prohibit a  
                    prescriber from checking a box on a prescription  
                    marked "Do not substitute," provided that the  
                    prescriber personally initials the box or checkmark.   
                    For an electronic data transmission prescription,  
                    permits a prescriber to indicate "Do not substitute,"  
                    or words of similar meaning, in the prescription as  
                    transmitted by electronic data, or may check a box  
                    marked on the prescription "Do not substitute." In  
                    either instance, specifies that it is not required  
                    that the prohibition on substitution be manually  
                    initialed by the prescriber.

          2.Requires a dispensing pharmacist or the pharmacists' designee,  
            within five days following the dispensing of any biological  
            product, to communicate to the prescriber the specific  
            biological product provided to the patient, including the name  
            of the biological product and the manufacturer. Requires the  
            communication to be conveyed by:

                  a.        Making an entry into an interoperable  
                    electronic medical records (EMR) system, through  
                    electronic prescribing technology, or a pharmacy  
                    record that is electronically accessible by the  








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                    prescriber; or,
                  b.        Using facsimile, telephone, electronic  
                    transmission, or other prevailing means.  In this  
                    instance, prohibits that communication from being  
                    required to the prescriber when there is no  
                    FDA-approved interchangeable biological product for  
                    the product prescribed or when a refill prescription  
                    is not changed from the product dispensed on the prior  
                    filling of the prescription.

          3.Makes a selection of an alternative biological product within  
            the discretion of the pharmacist, except as provided in b) of  
            1) above.  Requires a pharmacist who selects an alternative  
            biological product to assume the same responsibility as would  
            be incurred in filling a prescription for a biological product  
            prescribed by name. 

          4.Prohibits any liability on the prescriber for an act or  
            omission by a pharmacist in selecting, preparing, or  
            dispensing an alternative biological product. 

          5.Prohibits the pharmacist, in any case, 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.  Requires "cost," for these purposes, to include any  
            professional fee that may be charged by the pharmacist.

          6.Requires this bill to apply to all prescriptions, including  
            for Medi-Cal enrollees.

          7.Requires the substitution of a biological product to be  
            communicated to the patient.

          8.Requires the Board of Pharmacy (BOP) to maintain on its Web  
            site a link to the current list, if available, of biological  
            products determined by the FDA to be interchangeable.

          9.Specifies that this bill does not prohibit the administration  
            of immunizations by pharmacists.

          10.Specifies that this bill does not prohibit a health plan or  
            insurer from requiring prior authorization or imposing other  
            appropriate utilization controls in approving coverage for any  
            biological product.









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           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           COMMENTS  :
          1.Author's statement.  According to the author, SB 671 updates  
            California law so when the FDA approves interchangeable  
            biosimilars, California pharmacists can substitute those lower  
            cost biosimilars for brand name biologics.  In order for  
            biosimilars 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.  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.
            
          2.Generics. 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.
            
          3.Biologics.  According to the FDA, biologics include a wide  
            range of products such as vaccines, blood and blood  
            components, allergenics, somatic cells, gene therapy, tissues,  
            and recombinant therapeutic proteins. Biologics can be  
            composed of sugars, proteins, or nucleic acids or complex  
            combinations of these substances, or may be living entities  
            such as cells and tissues. Biologics are isolated from a  
            variety of natural sources - human, animal, or microorganism -  
            and may be produced by biotechnology methods and other  
            cutting-edge technologies. Gene-based and cellular biologics,  
            for example, often are at the forefront of biomedical  
            research, and may be used to treat a variety of medical  
            conditions for which no other treatments are available.  In  
            contrast to most drugs that are chemically synthesized and  








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            their structure is known, most biologics are complex mixtures  
            that are not easily identified or characterized. Biological  
            products, including those manufactured by biotechnology, tend  
            to be heat sensitive and susceptible to microbial  
            contamination. Therefore, it is necessary to use aseptic  
            principles from initial manufacturing steps, which is also in  
            contrast to most conventional drugs. Biologic medicines  
            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 physicians'  
            offices, oncology clinics, specialty pharmacies, hospitals or  
            dialysis centers.  

          4.Biosimilars.  According to the FDA, a biosimilar is a  
            biological product that is approved based on a showing that it  
            is highly similar to a FDA-approved biological product, known  
            as a reference product, and has no clinically meaningful  
            differences in terms of safety and effectiveness from the  
            reference product. Only minor differences in clinically  
            inactive components are allowable in biosimilar products. An  
            interchangeable biological product is biosimilar to an  
            FDA-approved reference product and meets additional standards  
            for interchangeability.  An interchangeable biological product  
            may be substituted for the reference product by a pharmacist  
            without the intervention of the health care provider who  
            prescribed the reference product. 

          5.Regulation of biosimilars.  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.  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  








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            biosimilar to or interchangeable with a reference biological  
            product (an already-licensed FDA biological product).  

            On March 6, 2015, the FDA approved the first biosimilar:  
            Zarxio.  Produced by Sandoz, the drug is biosimilar to Amgen's  
            Neupogen (filgrastim), which was originally licensed in 1991.  
            Zarxio is approved for the same indications as Neupogen, and  
            can be prescribed for patients:

             a.   with cancer receiving myelosuppressive chemotherapy;
             b.   with acute myeloid leukemia receiving induction or  
               consolidation chemotherapy;
             c.   with cancer undergoing bone marrow transplantation;
             d.   with severe chronic neutropenia; and, 
             e.   undergoing autologous peripheral blood progenitor cell  
               collection and therapy.

          1.Similar Legislative Efforts in Other States.  In the past two  
            years, at least 23 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.  

          2.Double referral. This bill was heard in the Senate Business,  
            Professions, and Economic Development Committee on April 13,  
            2015, and passed with a 7-0 vote.
            
          3.Prior legislation.  SB 598 (Hill) of 2013 was substantially  








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            similar to this bill.  SB 598 was vetoed by the Governor, who  
            stated about the prescriber notification provision of SB 598:
          
            This requirement, which on its face looks reasonable, is for  
            some reason highly controversial.  Doctors with whom I have  
            spoken would welcome this information.  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? has not yet determined what  
            standards will be required for biosimilars to meet the higher  
            threshold for "interchangeability." Given this fact, to  
            require physician notification at this point strikes me as  
            immature. 

            AB 1139 (Lowenthal) of 2013 would have permitted a pharmacist  
            to substitute a biosimilar for a biological product if the  
            product is deemed by the FDA to be interchangeable with the  
            biological product.  AB 1139 was not heard in a policy  
            committee.   

          4.Support.  The Arthritis Foundation states that 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 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.  Johnson & Johnson states that this bill updates  
            Pharmacy Law to allow for substitution of a new class of  
            FDA-approved medicines and will do so in a manner that 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 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  








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            National Black Nurses Association, Inc. states that 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.  The National  
            Kidney Foundation states that 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.  Novartis Pharmaceuticals writes that  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.  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  
            substitution, should the FDA grant such a designation, are  
            treated the same in its defined substitution process.  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.

          5.Support if amended.  Alliance of Specialty Medicine, in  
            response to a previous version of this bill, writes that this  
            bill addresses key policy issues to ensure patient safety is  
            preserved, and urges the author to define "reasonable time"  
            for purposes of notifying a prescriber that a biologic had  
            been dispensed. This bill was amended on April 14, 2015 to  
            clarify that the notification is required to be made within  
            five days of a pharmacist dispensing a product.  
          








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          6.Opposition.  The Academy of Managed Care Pharmacy writes that  
            this 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.  America's Health  
            Insurance Plans states that the notification requirement in  
            this bill creates a false impression about the safety of  
            biologics, will hinder their use and creates unnecessary  
            burdens, and 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.  The California Association of  
            Health Plans states that 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  
            states 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.
            
          7.Oppose unless amended.  The California Pharmacists Association  
            (CPhA) states 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.  CPhA 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.
            
            The California Retailers Association (CRA) writes that it  
            appreciates use of the verb "communicate" over prior efforts  
            using "notification," the organization still believes this  








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            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 writes 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.  

            The National Association of Chain Drug Stores, 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.  

            According to the Pharmaceutical Care Management Association,  
            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  
            states that will make the notification process workable.

            Walgreens states 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.  










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          8.Technical amendment.

            On page 3, beginning on line 23
            (d) Selection pursuant to this section is within the  
            discretion of the pharmacist, except as provided in  
            subdivision (c). A pharmacist who selects  the   an alternative  
             biological product to be dispensed pursuant to this section  
            shall assume the same responsibility for substituting the  
            biological product as would be incurred in filling a  
            prescription for a biological product prescribed by name. 

           SUPPORT AND OPPOSITION  :
          Support:  AIM at Melanoma Foundation
                    Amgen
                    Arthritis Foundation
                    Biocom
                    Biotechnology Industry Organization
                    California Healthcare Institute
                    Chrohn's and Colitis Foundation of America
                    Express Scripts
                    Genentech
                    Hospira
                    Johnson and Johnson
                    Kidney Cancer Association
                    Lilly USA, LLC
                    Medical Oncology Association of Southern California
                    Merck and Co., Inc.
                    National Black Nurses Association
                    National Kidney Foundation
                    Novartis Pharmaceuticals
                    Novo Nordisk, Inc.
                    Pharmaceutical Research and Manufacturers of America
                    Sandoz
                    Sanofi
                    State Building and Construction Trades Council
                    UCB, Inc.
          
          Oppose:   Academy of Managed Care Pharmacy
                    America's Health Insurance Plans
                    Association of California Life and Health Insurance  
                    Companies
                    California Association of Health Plans
                    California Pharmacists Association (unless amended)
                    California Retailers Association (unless amended)
                    CVS Health (unless amended)








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                    Kaiser Permanente
                    Molina Healthcare of California
                    Mylan
                    National Association of Chain Drug Stores (unless  
                    amended)
                    National Community Pharmacists Association
                    Pharmaceutical Care Management Association (unless  
                    amended)
                    Walgreens (unless amended)

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