California Assembly Passes Bill on Biosimilar Drug Use

Pharmaceutical makers won approval from the California Assembly to restrict generic versions of drugs isolated from natural sources, such as vaccines, known as biosimilars, once they become available in the U.S.

The bill passed yesterday would require pharmacies to notify doctors and sometimes patients when a cheaper biosimilar drug is substituted for a brand-name medicine. It also would forbid a pharmacist from substituting the biosimilar drug if the physician says no.

Biosimilars are generic versions of drugs derived from living cells, known as biologics, for chronic diseases and conditions including cancer, heart disease and diabetes. Drugmakers such as Thousand Oaks, California-based Amgen Inc. (AMGN), which holds patents on biologics, want to limit the use of biosimilars. Global sales of biologics jumped 69 percent in five years to $157 billion in 2011, according to IMS Health, a health-care data provider based in Danbury, Connecticut.

“California should not jump the gun when the federal government has a process under way to sort out the benefits and risks of some of the costliest pharmaceuticals coming on the market,” Patrick Johnston, president of the California Association of Health Plans, said in an interview, referring to the U.S. Food and Drug Administration. “The FDA should finish its process and determine which drugs are suitable for substitution before California enacts any new laws.”

The bill, which passed 58-4, returns to the state Senate, where it was approved May 2, to reconcile changes made in the Assembly. Governor Jerry Brown, a Democrat, hasn’t said whether he’ll sign the bill.

No Notice

Under current state law, a pharmacist can substitute generic drugs without notifying the prescriber. While no biosimilars have been approved by the FDA, they are allowed in Europe.

Geoffrey Eich, executive director for research and development policy at Amgen, said the company is investing in six biosimilars in addition to the biologics it manufactures.

“We’ll benefit from the confidence patients will have in biosimilars,” he said in an interview.

More complex than small-molecule chemical drugs, biologicals include blood and blood components, gene therapies, tissues and proteins. Some are nearing the end of their patented status, paving the way for the advent of their biosimilar twins.

The California Public Employees’ Retirement System, the biggest public pension and the nation’s second-largest purchaser of health insurance, voted Aug. 21 to oppose the bill in its current form.

Calpers’s objections to limiting the generics centered on costs. Biosimilars are projected to save tens of billions of dollars in health care over the next decade.

‘Unnecessary’ Limits

“The bill imposes unnecessary physician notification requirements on pharmacists that could potentially reduce the number of prescriptions substituted with biosimilars,” a Calpers lobbyist, Danny Brown, wrote in an Aug. 21 letter to state Senator Jerry Hill, a Democrat from San Mateo who is the measure’s sponsor.

In testimony to the Calpers board the same day, Mandy Lee, a lobbyist for the California Retailers Association, said the biosimilars bill “is designed to derail the market entry of less-costly, more-affordable lifesaving products.”

Ten states have rejected legislation this year that would have regulated biosimilars. Four others approved such measures, though three put sunset clauses on the notification requirement, meaning the restriction will die after a certain number of years.

To contact the reporter on this story: Mark Melnicoe in Sacramento at mmelnicoe@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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