California governor vetoes biosimilar substitution bill

In October 2013, Governor Jerry Brown of California vetoed Senate Bill 598 (SB 598). The failed SB 598 would have changed California’s pharmacy law to require, in part, any pharmacy to notify the prescribing healthcare professional within five business days as to whether the prescription dispensed was a biological product or an interchangeable biosimilar. Alternatively, the pharmacy would have been allowed to document the information in an interoperable patient record system accessible by the prescriber.

Across the country

The Biologics Price Competition and Innovation Act of2009 (BPCIA), which is included in the Affordable Care Act, provides for biosimilar substitution and interchange of biological products, as set forth in Section 351(k) of the BPCIA. Since that passage, many states have introduced legislation in anticipation of pharmacy handling of such substitution.

Notably, FDA has still not approved or accepted a biosimilar biological product or application. Nevertheless, it is widely thought that biosimilars will be treated much like traditional drug markets, where branded-to-generic substitutions provide for broad market penetration of generics when available. Third-party payors and PBM are likely to welcome the reduced costs associated with biosimilars, and it is thought that the marketplace will be motivated to move forward quickly on this front.

In California

California’s State Assembly and State Senate passed SB 598 without issue. However, when Governor Brown received SB 598, a flurry of opposition from the marketplace hampered his approval of the bill.

Several dozen marketplace stakeholders urged him to veto SB 598. The list of opposing bodies that went on the record includes AARP, CalPERS, California Pharmacists Association, California Association of Health Plans, California Retailers Association, California Correctional Health Care Services, CVS Caremark, Express Scripts Inc., Kaiser Permanente, Pacific Business Group on Health, Walgreens, The Generic Pharmaceutical Association (“GPhA”), and nine state labor unions. GPhA argued that SB 598 would interfere with California’s ability to save billions of healthcare dollars in savings over 10 years from biosimilar substitution.

The governor’s decision

Governor Brown’s reasons for vetoing SB 598 were itemized in a letter to the California State Senate. It stated the following:

“Senate Bill 598 would effect two changes to our state’s pharmacy law. First, it would allow interchangeable ‘biosimilar’ drugs to be substituted for biologic drugs, once these interchangeable drugs are approved by the federal Food and Drug Administration (FDA). This is a policy I strongly support.

“Second, it requires pharmacists to send notifications back to prescribers about which drug was dispensed. 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, which has jurisdiction for approving all drugs, has not yet determined what standards will be required for biosimilars to meet the higher threshold of ‘interchangeability.’ Given this fact, to require physician notification at this point strikes me as premature.

“For these reasons, I am returning SB 598 without my signature.”

More to come

The first year of controversy at the state legislative level is coming to a close. In general, health insurers and generic drug companies have edged out brand-name drugmakers.

In summary, the arguments surround the manner in which pharmacists are able to dispense the cheaper versions of biotechnology drugs, which are otherwise generally high-touch pharmaceuticals. Although the BCPIA calls for the approval of copycat biologics, the substitution laws that enable a pharmacist to dispense the biologic prescription are governed at the state level and enforced by a board of pharmacy.

In addition to battles brewing at the state and federal levels, biosimilars are also facing a global nomenclature challenge that the World Health Organization (WHO) is set to take up. In that regard, the WHO sees two problems. The first relates to exhaustion of supply: The finite pool of possibilities for a qualifying Greek-letter suffix to add to each biosimilar’s international proprietary name is running out. The second relates to whether biosimilars should have unique names or should share the name of the original biologic, a question that remains controversial.