BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  July 7, 2015


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                Susan Bonilla, Chair


                       SB 671(Hill) - As Amended June 23, 2015


          SENATE VOTE:  31-5


          NOTE: This bill is double referred, and if passed by this  
          Committee, it will be referred to the Assembly Committee on  
          Health. 


          SUBJECT:  Pharmacy: biological product.




          SUMMARY:  This bill authorizes a pharmacist to substitute an  
          alternative biological product when filling a prescription for a  
          prescribed biological product under specified circumstances and  
          requires the Board of Pharmacy (Board) to maintain a link on its  
          website to the list of interchangeable biological products  
          recognized as interchangeable by the federal Food and Drug  
          Administration (FDA). 



          EXISTING LAW:











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           Federal Law:

         1)Under 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))

         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)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 of the FDA and which have been  








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               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)      Samples of the drug and of the articles used as  
                   components, as the Secretary may require.



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



                 vi)      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  








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                   prescribed, recommended or suggested in the labeling  
                   proposed for the new drug have been previously  
                   approved.



                 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 new drug is  
                   biologically equivalent the listed drug, except as  
                   specified.



                 v)       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 262(i)(1))

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








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             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)

          


          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  
            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 §  








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            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: 


          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  








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            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.

          1)Within five days following the dispensing of a biological  
            product, a dispensing pharmacist or the pharmacist's designee  
            shall make an entry of the specific biological product  
            provided to the patient, including the name of the biological  
            product and the manufacturer.  Provides that the communication  
            shall be conveyed by making an entry that can be  
            electronically accessed by the prescriber through:

              a)    An interoperable electronic medical records system;

              b)    An electronic prescribing technology;

              c)    A pharmacy benefit management system; or,









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              d)    A pharmacy record.

          2)Entry into an electronic records system is presumed to provide  
            notice to the prescriber.  If the pharmacy does not have  
            access to one or more of the aforementioned entry systems, the  
            pharmacist of 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. 

          5)Specifies 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."  

          7)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.  

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

          9)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.

          10)Applies these provisions to all prescriptions, including  
            those presented by or on behalf of persons receiving  
            assistance from the federal government or pursuant to the  








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            Medi-Cal Act (Welfare and Institutions Code Section 14000 et.  
            seq.).

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

          12)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.

          13)Clarifies that a pharmacist may still give immunizations  
            pursuant to a protocol with a prescriber. 

          14)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.

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

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, this bill will result  
          in negligible state costs.


          COMMENTS:  


          Purpose.  This bill is sponsored by the author.  According to  
          the author, "SB 671 updates California law so when the federal  
          Food and Drug Administration 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  








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          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 so California consumers can save  
          money."


          Background.  A "biologic" drug is one that is created by  
          biological rather than chemical processes.  Biologics have been  
          available for more than 20 years and include enzymes, human  
          growth hormones, human insulins, interleukins, and vaccines.   
          Many biologics are among the most costly medicines available,  
          ranging from $1,000 to $50,000 per treatment.  


          Biologic drugs represent a fast-growing segment of the  
          pharmaceutical market, constituting 32% of products in the  
          development pipeline and accounting for around 10% of  
          pharmaceutical expenditures (as of 2011).  The biologic market  
          is expected to grow more than 20% per year.


          Biologic drugs are currently prescribed to treat blood  
          conditions, cancers, immune disorders such as Rheumatoid  
          Arthritis, Psoriasis and Crohn's Disease and neurological  
          disorders like Multiple Sclerosis and are almost exclusively  
          administered in physician's offices, oncology clinics, specialty  
          pharmacies, hospitals or dialysis centers. 


          A "biosimilar" is a biologic drug that is designed to be  
          comparable to a particular existing biologic drug, known as the  
          biologic "reference" drug.  It is not generic, the same or  
          identical.  In fact, regulatory agencies including the World  
          Health Organization, the FDA and the European Medicines Agency  
          have deemed that biologics cannot scientifically have "generic  
          or identical versions" and instead can only have "similar"  
          versions.  Some manufacturers will seek "interchangeable" status  
          for their biosimilar, a designation granted by the FDA that  








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          means those biosimilar drugs may be substituted for the biologic  
          reference drug without any expected change in clinical outcomes.  
           


          Current Law Relating to Substitutions.  In practice, this bill  
          would allow a pharmacist to substitute an interchangeable  
          biosimilar for a prescribed biologic to save money, in the same  
          way a pharmacist may currently substitute a generic for a brand  
          name drug.   


           Currently, a pharmacist filling a prescription order for a drug  
          prescribed by its brand name may substitute a generic drug  
          instead, unless the prescriber personally indicates verbally or  
          in writing not to substitute.  The prescriber is not liable for  
          the pharmacist selecting, preparing, or dispensing a generic  
          drug, and a pharmacist may not substitute a generic drug unless  
          it results in cost savings for the patient. 


          These existing provisions of law would apply to the substitution  
          of interchangeable biosimilars as well, except that a biosimilar  
          may be substituted which costs the patient the same or less than  
          the prescribed biological product. 


          Biologics Price Competition and Innovation Act.  The Biologics  
          Price Competition and Innovation Act (Act) was enacted as part  
          of the federal Affordable Care Act on March 23, 2010.  The Act  
          created an abbreviated licensure pathway for biosimilars.   


           The Act defines "biosimilarity" to mean that "the biological  
          product is highly similar to the reference product  
          notwithstanding minor differences in clinically inactive  
          components" and that "there are no clinically meaningful  
          differences between the biological product in terms of the  
          safety, purity, and potency of the product."    








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          The FDA sets an even higher standard for biosimilar drugs that a  
          manufacturer wants to deem "interchangeable" with a biologic  
          reference drug.  To attain interchangeability, according to the  
          FDA, "a [manufacturer] must provide sufficient information to  
          demonstrate biosimilarity, and also to demonstrate that the  
          [interchangeable biosimilar] can be expected to produce the same  
          clinical result as the reference product in any given patient  
          and, if the [interchangeable biosimilar] product is administered  
          more than once to an individual, the risk in terms of safety or  
          diminished efficacy of alternating or switching between the use  
          of the biological product and the reference product is not  
          greater than the risk of using the reference product without  
          such alteration or switch."  


          In other words, a patient should not experience a difference  
          between an interchangeable biosimilar and its reference  
          biologic.  The Act expressly states that a pharmacist or other  
          dispenser may substitute an interchangeable biological product  
          for the reference product without consulting the prescribing  
          doctor.  


          Impact on Pharmacies.  Only seriously ill patients are  
          prescribed biologic medicines which are almost exclusively  
          prescriber administered.  In California, biologics represent a  
          small fraction of prescriptions dispensed at the retail level.   
          According to a July 2014 MarketScan report for the period  
          January 2013 to December 2013, retail pharmacies in California  
          dispensed an average of 3.85 biologic prescriptions per week per  
          location.  Walgreens pharmacies in California currently perform  
          over 4.5 million physician notifications per month for  
          traditional prescriptions.  In the event of a biosimiliar  
          substitution, this bill requires that within five days the  
          substitution information be made available to the prescriber. 
           
          Prescriber Notification.  This bill would require a pharmacist  








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          to inform the prescriber of the interchangeable biosimilar  
          substitution within five business days of the selection.   
          According to the author, with biologic medicines, adverse  
          reactions, which occur when a patient's body recognizes a  
          biologic medicine as a foreign matter, may not manifest until 9  
          to 12 months after the administration of the drug.  In order to  
          ensure consumer safety, health records should be updated in the  
          event of any contraindications in patients receiving substituted  
          biosimilars.  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.


          Insulin.  Biological products are approved by the FDA under two  
          different federal statutes: the Public Health Service Act (PHSA)  
          or the Food, Drug, and Cosmetic Act (FDCA) (insulins, growth  
          hormones and a few others).  Biologics have been classified  
          under one statute versus the other solely for historical reasons  
          - not scientific differences.  Accordingly, the two categories  
          of biologics will ultimately be "merged" by federal law on March  
          23, 2020.  According to the author, until then, it is necessary  
          to include the FDCA products in SB 671 so they can be  
          automatically substituted when an interchangeable biosimilar is  
          approved.  Currently, there are no insulins that have been  
          determined by the FDA to be therapeutically equivalent therefore  
          they are not currently allowed to be automatically substituted.
          
          Prior Related Legislation.  SB 538 (Hill) of 2013, was  
          substantially similar to this measure.  NOTE: The bill was  
          vetoed by the Governor because the FDA had not determined  
          standards for biosimilars to meet the higher threshold for  
          interchangeability." 


          ARGUMENTS IN SUPPORT: 


           AMGEN  supports the bill.  In their letter they write, "The  
          pursuit of science-based medicines that restore health or even  








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          save lives is fundamental to our values.  Amgen's leading  
                                                        position in biotechnology, long-standing commitment to patient  
          safety and leadership in manufacturing high quality biologic  
          medicines mean that Amgen is equipped to develop and produce  
          safe and effective biosimilars.  In fact, we have nine  
          biosimilar molecules in our pipeline." 


          The  Arthritis Foundation  supports the bill and writes, "When  
          therapeutic innovations come to market, patient safety must  
          remain the number one priority in any discussion; even if a drug  
          is less expensive, these advantages mean nothing if the drug  
          does not successfully treat the patient.  It is important to  
          remember that these are complex medications, and that  
          interchangeable biological products are not the same as  
          generics.  Because of this, the Arthritis Foundation is  
          committed to ensuring that concerns of people who take these  
          medications, and the specialist physicians who treat them, are  
          kept at the forefront.  By doing so, the patient and physician  
          can continue a dialogue ensuring they receive the optimal care  
          with these game-changing medications." 


          The  Biotechnology Industry Organization  ,  BIOCOM  , and  California  
          Life Sciences Association  all support the bill.  They write in  
          their joint letter, "This legislation ensures patients and their  
          physicians remain in control of their medical treatment options  
          as the market for complex biologics evolves." 


           Boehringer-Ingelheim Pharmaceutical Company  also supports the  
          bill and writes, "The leading companies developing and marketing  
          biologic products, including biosimilars and interchangeable  
          biologics, have been engaged in discussions on the various state  
          legislative proposals.  Through the legislative process, it has  
          become clear that physicians, and patients, see value in  
          transparent communication on all biologic medicines dispensed in  
          order to maintain a consistent and complete medical record."









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           Genentech  supports the bill and writes, "SB 671 requires  
          pharmacists to communicate the substitution of an  
          interchangeable biosimilar to a patient's prescriber.  This  
          safeguard is critical in the event of an adverse reaction or  
          change in a patient's chronic condition.  It is important that  
          physicians have access to a patient's health record to best  
          interpret any health changes or negative clinical responses and  
          respond appropriately." 


          The  Medical Oncology Association of Southern California, Inc  .  
          writes, "SB 671 is a common sense bill that ensures patients may  
          have access to life-saving, lower cost, FDA-approved  
          biosimilars.  On behalf of our patients who depend upon safe,  
          affordable, effective medications for their health and  
          well-being, we urge passage of SB 671." 


          The  Pharmaceutical Research and Manufacturers of America   
          supports the bill and writes, "Ensuring patient safety is  
          essential in the implementation of the Biologic Price  
          Competitions and Innovation Act of 2009 and the amendment of  
          state substitution laws to permit the substitution of  
          interchangeable biosimilars.  SB 671 amends California law to  
          put patient protections in place that recognize the unique  
          attributes of biosimilar products."


           UCB Inc  . supports the bill and writes, " If and when the U.S.  
          Food and Drug Administration determines that certain  
          "biosimilars" are interchangeable, it is important to have state  
          substitution laws in place to address issues that are critical  
          for patient safety." 


          ARGUMENTS IN OPPOSITION:










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          The  Academy of Managed Care Pharmacy  writes in opposition, "The  
          restrictive notification requirements in this legislation will  
          discourage substitution of more affordable interchangeable  
          biologic products and will potentially increase medication costs  
          to patients and payers and, thereby, threaten patient access to  
          these products.  It will also discourage drug manufacturers from  
          developing those products because of the administrative burdens  
          in Senate Bill 671 that clearly favor the dispensing of more  
          expensive biologic products." 


          The  Association of California Life & Health Insurance Companies   
          writes in their letter of opposition, "Recognizing that the FDA  
          is the only U.S. regulatory body with the scientific expertise  
          to determine when and how biosimilars and interchangeable  
          biologics may be substituted for branded biologics, this  
          legislation is especially concerning as it has the potential to  
          generate doubt about the safety and effectiveness of  
          interchangeable biologics in today's market.  For this reason we  
          strongly believe that California should proceed cautiously and  
          allow the FDA the opportunity to do their job and fully and  
          effectively evaluate these products."


          The  California Association of Health Plans  opposes the bill and  
          writes, "SB 671 creates doubt about the safety of biosimilar  
          drugs by placing notification requirements on drugs that have  
          been available in international markets for over a decade.   
          These before-the-fact administrative burdens will do little if  
          anything to ensure public safety and they will increase the cost  
          of access to these life-saving drugs." 


           Molina Healthcare  also opposed the bill.  In their letter they  
          state, "Earlier this year, the U.S. Centers for Medicare and  
          Medicaid Services released guidance relating to these new  
          medications, calling on state Medicaid programs to see the  
          approval of new biologics "as a unique opportunity to achieve  
          measureable cost savings and greater beneficiary access to  








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          expensive therapeutic treatments for chronic conditions" and to  
          "encourage and maximize their use." SB 671 would instead hinder  
          their use through unnecessary notice burdens. 


          The  Pharmaceutical Care Management Association  opposes the bill  
          and writes, "PCMA believes that the notification requirements in  
          SB 671 are unnecessary and will only prevent the cost savings to  
          patients and employers that can be achieved with use of  
          interchangeable biosimilar medication." 


          REGISTERED SUPPORT:


          AMGEN


          Arthritis Foundation


          Biotechnology Industry Organization


          Biocom


          Boehringer-Ingelheim Pharmaceutical Company


          California Life Sciences Association


          ExpressScripts


          Genentech










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          Medical Oncology Association of Southern California, Inc.


          Novartis Pharmaceuticals


          Pharmaceutical Research and Manufacturers of America


          UCB Inc.


          


          REGISTERED OPPOSITION:


          Academy of Managed Care Pharmacy 


          Association of California Life & Health Insurance Companies


          California Association of Health Plans 


          Kaiser Permanente


          Molina Healthcare





          Analysis Prepared by:Le Ondra Clark Harvey, Ph.D. / B. & P. /  
          (916) 319-3301









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