The pharmaceutical industry's movement to regulate quasi-generic versions of specialty biologic drugs hit a roadblock in California, giving a reprieve to some health stakeholders, including CalPERS, calling for competition in the nascent "biosimilars" market.
On Oct. 12, California Governor Jerry Brown vetoed Senate Bill 598, which would have placed a number a restrictions on the use of biosimilar or "follow-on" biologic pharmaceutical products in place of patented 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 bill would have allowed pharmacists to dispense biosimilars if the biosimilar and brand-name products are deemed interchangeable by the Food and Drug Administration, if the prescribing doctor does not prohibit substitutions and if pharmacists notify the prescriber within five business days.
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 as interchangeable.
"Given this fact, to require physician notification at this point strikes me as premature," Brown wrote in his decision to veto the bill.
The bill passed with wide margins in the legislature, 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, offered "a balanced framework governing the use of biosimilars and gives doctors and patients more and better choices."
But with concerns over cost and access, more than 30 organizations urged the governor to veto the bill, including the California Public Employee Retirement System (CalPERS), the California Association of Health Plans, the California Pharmacists Association, AARP, Walgreens, the California Retailers Association, CVS Caremark, the Pacific Business Group on Health, Express Scripts Inc. and Kaiser Permanente.
CalPERs spent $236 million on biologic drugs for its 1.3 million members in 2011 -- accounting for more than 90 percent of specialty drug spending and about 15 percent of total drug spending -- and bought ads opposing the bill with other organizations.
"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.
Although the ACA doesn't preclude states from enacting limitations on biosimilars, the FDA did not seem keen on the bill. "The 2010 law expressly states that an interchangeable biological product may be substituted for the reference product without the intervention of the healthcare provider who prescribed the reference product," the FDA wrote to the Generic Pharmaceutical Association.
"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."
California was one of 19 states that considered legislative proposals regulating biosimilars this year, and Virginia was the first to enact a law this March, with notification requirements similar to California's SB 598 (but allowing an optional 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.