California Governor Jerry Brown is deciding whether to sign a bill regulating quasi-generic versions of specialty biologic drugs known as biosimilars -- and some provisions have raised cost and access concerns among health payers like the California Public Employee Retirement System.
Passed with wide majorities in the California legislature, Senate Bill 598 would allow pharmacists to dispense biosimilar or "follow-on" biologic pharmaceutical products in place of patented brand-name biologics (such as antibody therapies for rheumatoid arthritis), if the biosimilar and brand-name products are deemed interchangeable by the Food and Drug Administration and if the prescriber does not prohibit substitutions.
The bill was sponsored by State Senator Jerry Hill, whose district includes parts of San Francisco and Silicon Valley, and was backed by the California life sciences industry group BIOCOM and large firms like Actavis and Amgen. The bill's regulatory framework, said BIOCOM president Joseph Panetta, "provides a balanced framework governing the use of biosimilars and gives doctors and patients more and better choices."
Some other healthcare groups have raised concerns about the bill moving in California ahead of federal regulations and possibly ending up limiting access to biosimilars by supporting the market for brand-name biologics -- among the most prescribed being Humira, Remicade and Enbrel for arthritis, Lantus for diabetes, and Herceptin, for breast cancer and some gastrointestinal cancers.
The FDA is still finalizing regulations for biosimilar products, under an Affordable Care Act section aimed at allowing generic versions of biologics in the market, and has not yet approved any.
One of few biosimilar bills to pass a full legislature, SB 598 could put the "the state at risk for conflicting with federal rules," said Nicole Kasabian Evans, communications vice president of the California Association of Health Plans, which criticized the bill in ads with the California Retailers Association and the California Pharmacists Association.
In general, Evans argued, SB 598 "would create unnecessary barriers to using biosimilar substitution by creating extra paperwork and costly processes for pharmacists and physicians."
Under the bill, prescribing providers would be able to prohibit biosimilars for their patients with "Do Not Substitute" instructions, and pharmacists that do dispense biosimilars would have to notify the prescriber within five business days.
The Generic Pharmaceutical Association, which has criticized similar bills in several states, made an argument similar to California Health Plan's Evans, citing an FDA statement on the ACA's biosimilar section.
"The 2010 law expressly states that an interchangeable biological product may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product," the FDA wrote to the Generic Pharmaceutical Association (although the section doesn't preclude states from enacting limitations).
"Substitutability helped spur the growth of the generic drug industry at an earlier time and is similarly essential to help foster competition in the biologic drug market," the FDA continued. "Ultimately, such competition will spur innovation, improve consumer choice and drive down medical costs."
CalPERS, the California public employees retirement system, ended up opposing the bill on the basis of long-term cost uncertainties.
"If CalPERs is unable to realize the full savings from interchangeable biosimilar products, we may ultimately be forced to raise prescription drug co-payments or health insurance premiums, shifting even more increasingly unaffordable healthcare costs to our members and families," the public agency wrote to the bill's sponsor.
In 2011, CalPERs spent $236 million on biologic drugs for its 1.3 million members -- accounting for more than 90 percent of specialty drug spending and about 15 percent of total drug spending.
Gov. Brown has not said whether he'll sign the bill (he's currently immersed in finding solutions to a prison overcrowding crisis), and other governors are surely set to face similar decisions; some 19 states have considered legislative proposals to regulate biosimilars this year.
Virginia was the first to enact a law this March, with notification requirements similar to California's SB 598 (but allowing an option pharmacist-provider agreement in lieu of the five day notification period) and a provision, sunsetting in 2015, mandating that pharmacies display the "retail cost" of the prescribed biologics and the substituted biosimilar. North Dakota enacted the nation's second biosimilar law, with a 24 hour notification period.
Global sales of biologics reached $157 billion in 2011, according to IMS Health, and in the U.S. they accounted for about 25 percent of the nation's roughly $320 billion in drug spending.