Biosimilar Substitution Bill Opposition Strikes Gold in California: Governor Brown Vetoes the Measure

October 15, 2013

By Kurt R. Karst

On October 12th, California Governor Jerry Brown finally acted on Senate Bill 598, vetoing the measure.  If enacted, the bill would have amended California’s Pharmacy Law to require, among other things, a pharmacy to notify a prescriber within 5 business days whether the prescription dispensed was a biological product or an interchangeable biosimilar (or enter the information in a patient record system shared by the prescriber) for prescriptions filled prior to January 1, 2017.  The bill is similar to legislation introduced in other states around the country over the past year (see our updated Biosimilar State Legislation Scorecard) concerning the substitution of biosimilar and interchangeable biological products licensed pursuant to Section 351(k) of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”).  Although FDA has not yet approved a biosimilar biological product (or even accepted a biosimilar application), there has been a significant push in the states to enact legislation governing their substitution.  The stakes are high.  Earlier this month ratings agency Fitch issued a report stating that acceptance of biosimilars is expected to be strong in the United States (vis-à-vis Europe).  The defeat of bills like that introduced in California could increase that acceptance even further.

SB 598 handily passed the State Assembly and State Senate, but ran into a brick wall of opposition when it landed on Governor Brown’s desk.  More than 30 organizations called for the Governor to veto the bill, including CalPERS, California Pharmacists Association, AARP, Walgreens, California Retailers Association, California Association of Health Plans, CVS Caremark, California Correctional Health Care Services, Pacific Business Group on Health, nine state labor unions, Express Scripts Inc., and Kaiser Permanente.  The Generic Pharmaceutical Association (“GPhA”) also urged Governor Brown to veto the bill (see here), and was particularly tenacious in its lobbying efforts against the enactment of a bill the organization alleged was designed to “thwart competition from biosimilars.”  The trade group regularly cited an Express Scripts study released in September to bolster its case that SB 598 would frustrate the State’s ability to capitalize on an estimated $27 billion in savings over 10 years from biosimilar substitution. 

In vetoing SB 598, Governor Brown wrote in a letter to the members of the California State Senate that:

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.

California is considered a bellwether state, and therefore, particularly important for those advocates on either side of the issue.  As several states prepare to begin new sessions next January, many folks in the nascent biosimilars industry will be asking whether the old adage – as California goes, so goes the nation – will hold true.

The next battle over biosimilars is poised to take place later this month when the World Health Organization convenes its 57th Consultation on International Nonproprietary Names (“INNs”) for Pharmaceutical Substances.  At issue is whether biosimilar versions of brand-name reference products should have unique names, or share the name of their brand-name counterpart.  In August, GPhA submitted a Citizen Petition (Docket No. FDA-2013-P-1153) to FDA requesting that the Agency implement its INN naming policy equally to all biologics (see our previous post here).