BILL ANALYSIS Ó SB 671 Page 1 Date of Hearing: July 14, 2015 ASSEMBLY COMMITTEE ON HEALTH Rob Bonta, Chair SB 671 (Hill) - As Amended June 23, 2015 SENATE VOTE: 31-5 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 and requires the Board of Pharmacy (Board) to maintain a link on its Website to the list of biological products recognized as interchangeable by the federal Food and Drug Administration (FDA). Specifically, this bill: 1)Updates permitted functions for pharmacists to allow a pharmacist to substitute an alternative biological product for a prescribed biological product only if: a) The alternative biological product, or biosimilar, is interchangeable. Defines "interchangeable" as a biological product that the FDA has determined meets the standards set forth in federal regulation or has been deemed SB 671 Page 2 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); or, 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. 2)Requires a pharmacist to communicate to the patient when an interchangeable alternative biological product is substituted for a biological product. 3)Requires a pharmacist, 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 prescriber; or, b) Using facsimile, telephone, electronic transmission, or other prevailing means if the pharmacy does not have access to a) above. SB 671 Page 3 4)Exempts the pharmacist from the communication requirement in 3b) above if 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. 5)Specifies that entry into an EMR system is presumed to provide notice to the prescriber. 6)Provides that selection of an interchangeable 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 SB 671 Page 4 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 Medi-Cal Act. 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 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. EXISTING FEDERAL LAW: SB 671 Page 5 1)Under the Food, Drug and Cosmetics Act (FDCA), requires drug manufacturers to obtain approval of new drugs from the 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 approval 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. 6)States that new drugs cannot be introduced into interstate commerce unless an application for approval is filed by either: SB 671 Page 6 a) Full report of investigations to be filed with an application to the Secretary of the FDA and which contain: 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 FDA Secretary may require; v) Specimens of the labelling proposed to be used for the drug; or, vi) Any assessments required under Section 355c. (21 U.S.C Section 355(b)). b) Abbreviated application of a new drug to be filed with the FDA Secretary and which must contain: SB 671 Page 7 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; 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 to the listed drug, except as specified; or, 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. 7)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. SB 671 Page 8 8)Classifies insulin as a hormone and therefore regulates these endocrine system derived drugs under the FDCA and not as biological products under the PHSA. 9)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. EXISTING STATE LAW: 1)Establishes the Food and Drug Branch within the California Department of Public Health 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)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. 3)Authorizes pharmacists filling prescription orders for drug products prescribed by their trade or brand names to substitute generic drugs 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 SB 671 Page 9 that a pharmacist may not substitute another drug product. 4)Authorizes pharmacists filling prescription orders for drug products prescribed by their trade or brand names to substitute a different form of the 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. FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, this bill will result in negligible state costs. COMMENTS: 1)PURPOSE OF THIS BILL. According to the author, this bill updates California law so when the federal 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. The author contends that it is therefore essential that a bill be passed this year making clear the procedures for substitution so California consumers can save money. SB 671 Page 10 2)BACKGROUND. a) Biologics. Conventional medications-drugs-are generally made from chemicals, or chemically synthesized, and therefore their structure can be relatively easily defined. In contrast to most conventional medications, biological products are generally derived from a living organism. They can come from many sources, including humans, animals, microorganisms, or yeast. Biologic products are large molecules, usually proteins, with complex molecular structures and manufacturing biologics is a far more complex process than manufacturing drugs. Biologics represent a small, but very expensive, section of the prescription drug market. Biologic medicines 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. They are often administered in physician's offices, oncology clinics, specialty pharmacies, hospitals or dialysis centers. b) Biosimilars. According the FDA, a biosimilar product (also known as an "alternate biological product") is a biological product that is approved based on a showing that it is highly similar to an already-approved biological product, known as a reference product. The biosimilar also must show it 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. Biosimilars are expected to create greater competition in the medical marketplace. They can provide additional treatment options for patients, but also lead to less expensive alternatives to comparable products. In Europe, SB 671 Page 11 where biosimilars already are available, they have been priced 15-30% less than their name brand versions. This savings would be significant, although not as great as savings from generic versions of conventional drugs, which can be up to 90% cheaper than branded versions. c) Interchangeability. According to the FDA, 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. Although the FDA approved the first biosimilar drug in March 2015, the drug has not been classified as an interchangeable biologic. Until the FDA determines standards for interchangeability of biologics, biosimilars cannot be substituted for branded pharmaceuticals. Though the FDA is in the process of creating a pathway for the approval of interchangeable biologics, they have not yet issued guidance to manufacturers of what that process may entail. Specifically, it is not yet known whether the FDA will allow substitution of interchangeable biosimilars without involving the prescribing physician. d) Biosimilars are not the same as generics. Like generic drugs, biosimilars generally will cost less than their branded counterparts. Despite the idea that biosimilars are often called "generic versions of biologics", they can never be exact chemical duplicates. In view of the complexity and sensitivity of biologicals to the manufacturing process, no two biologic medicines can be exactly the same, hence the term 'biosimilar' and not biogeneric. As a consequence of their complexity, automatic substitution of biologicals could potentially give rise to different clinical consequences and therefore many believe that this should be ruled out for reasons of SB 671 Page 12 patient safety. 3)BIOSIMILARS IN EUROPE. Europe is ahead of the United States when it comes to biosimilar adoption. The European Medicines Agency (similar to U.S. FDA) approved its first biosimilar in 2006, and sixteen biosimilar products are now available in European markets. In the European Union (EU), decisions on pharmacy substitution of biosimilars are made at the Member State level. According to the Generics and Biosimilars Institute, a number of EU Member States have explicitly banned substitution of biologics from different manufacturers. In 2014, France became the first EU country to explicitly authorize substitution. 4)FEDERAL ACTION ON BIOSIMILARS. The BCPIA was passed as part of the Patient Protection and Affordable Care Act. The BPCIA created an abbreviated licensure pathway for biological products shown to be similar to or interchangeable with the FDA-licensed biological product, also call the reference product. The FDA has begun to issue guidance and review applications for biosimilar drugs, but has not issued guidance for the full implementation of BPCIA. Federal guidelines for naming and interchangeability (among other aspects) of biosimilars are not complete. 5)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 bill 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 SB 671 Page 13 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)SUPPORT. The Pharmaceutical Research and Manufacturers of America states that ensuring patient safety is essential when implementing the BPCIA and for updating state substitution laws to permit the substitution of interchangeable biosimilars. This bill amends California law to put patient protections in place that recognize the unique attributes of biosimilar products. Other supporters point out that inclusion of biosimilars in the Pharmacy Practices Act mirrors California's patient protections for generic pill substitution to ensure patients are afforded the opportunity to consult with their doctor and pharmacist to make informed decisions on their healthcare choices, including using less costly medicines when appropriate. Patient advocacy groups, including Arthritis Foundation, the National Kidney Foundation, and others, support this bill because bringing alternate biological products to market will reduce patient drug costs for patients with complex diseases that often require high-priced specialty drugs, including biologics. 7)OPPOSITION. The Association of California Life and Health Insurance Companies, California Association of Health Plans, and other insurers oppose this bill because it has the potential to generate doubt about the safety and effectiveness of interchangeable biologics in today's market. When interchangeable drugs are approved by the FDA, they will establish standards laying out when and how those drugs can be SB 671 Page 14 substituted. Opponents generally state that administrative burdens, such as physician notification, will do little if anything to ensure public safety and they will increase the cost of access to these life-saving drugs. Additionally, the FDA is expected to do a thorough review of interchangeable biosimilars. Enacting early state regulations could create a potential conflict with federal directives. Instead, state lawmakers should review any FDA rulings before deciding whether any restrictions are necessary. 8)PREVIOUS LEGISLATION. a) SB 538 (Hill) of 2013, was substantially similar to this measure. 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." b) 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. The bill was never heard in a policy committee of the Legislature. 9)POLICY COMMENTS. a) Although the FDA has approved the first biosimilar product in the United States, it was not approved as an interchangeable drug, and therefore would not be subject to the substitution allowed in this bill. The FDA has not yet SB 671 Page 15 clarified the rules on interchangeability. When those guidelines are finalized, this bill might make California's law for substitution of biological products more stringent than federal law. The committee may wish to consider whether this bill is premature given that FDA still has a lot of work to do before finalizing rules on substitution of interchangeable biosimilars. b) This bill requires that pharmacists note the exact brand and manufacturer in an electronic records system for any biologic product dispensed. Given the complex nature of biologic drugs, this information is critical to be tracked in the patient record of any patient receiving any biologic drugs. The language exempts from parts of the communication requirements those pharmacies without access to electronic records systems, such as very small independent pharmacies. Although it is unclear how many small, independent pharmacies in this state would be dispensing biologic products under this bill, the Committee may wish to consider whether this partial exemption from the reporting requirements is necessary. 10)TECHNICAL AMENDMENT. a) Subdivision (c) appears to mix together two separate concepts, possibly due to a drafting error. To clarify legislative intent, the following technical amendment should be taken: (c) Entry into an electronic records system as described in subdivision (b) is presumed to provide notice to the prescriber. (d) If the pharmacy does not have access to one or more of SB 671 Page 16 the entry systems in subdivision (b), 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? REGISTERED SUPPORT / OPPOSITION: Support AIM at Melanona American Cancer Society - Cancer Action Network Amgen Arthritis Foundation Association of Northern California Oncologists Biocom Biotechnology Industry Organization Boehringer-Ingelheim Pharmaceutical Company SB 671 Page 17 California Life Sciences Association Crohn's & Colitis Foundation of America Express Scripts Genentech Hospira Johnson & Johnson Lilly USA, LLC Lupus Foundation Medical Oncology Association of Southern California, Inc Merck National Black Nurses Association National Kidney Foundation Novartis Pharmaceuticals SB 671 Page 18 Novo Nordisk, Inc Pharmaceutical research and Manufacturers of America Sandoz State Building and Construction Trades Council, AFL-CIO UCB, Inc Opposition America's Health Insurance Plans Association of California Life and Health Insurance Companies California Association of Health Plans Kaiser Permanente Analysis Prepared by:Dharia McGrew / HEALTH / (916) 319-2097 SB 671 Page 19