BILL ANALYSIS                                                                                                                                                                                                    Ó



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          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  








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               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.









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          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  








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            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:  











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          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:








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             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:








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               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. 








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          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  








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            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.









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          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,  








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               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  








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               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  








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            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  








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            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  








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               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  








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               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








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          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








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          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









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